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Author: 


Terry,  Samuel  Hough 


Title: 


How  to  keep  a  store 


Place: 


New  York 

Date: 

1882 


MASTER   NEGATIVE  # 


COLUMBIA  UNIVERSITY  LIBRARIES 
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ORIGINAL  MATERIAL  AS  FILMED  •    EXISTING  BIBLIOGRAPHIC  RECORD 


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Terry,  Samuel  Hough. 

How  to  keep  a  store.    Embodying  the  conclusions  of  ^ 
thirty  years'  experience  in  merciiandizing.     By  Samuel 
H.  Terry.    New  York,  Fowler  &  Wells,  1882. 

1  p.  1.,  [5i-406  p.    IPr™. 

Pub.  also  under  title:  The  retailer's  manual. 


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Columbia  Winibtviity 

in  tfie  Cttp  of  ^eto  |?orfe 


LIBRARY 


PRESENTED  BY 

THE  ALUMNI  FUND 
COMMITTEE 

FROM  THE  LIBRARY  OF 

CLIFFORD  GRAY,  '02S. 
1924 


HOW  TO  KEEP  A  STORE, 


EMBODYING 


THE  CONCLUSIONS  OF  THIRTY  YEARS'  EXPERIENCE 

IN    MERCHANDIZING. 


BY 


SAMUEL    H.    TERRY. 


NEW   YORK: 

FOWLER    &    WELLS, 

753   Broadway 

1882. 


a 


fLA^--'^ 


My<^ 


CLIFFORD  GRAY  COLLECTION 

COPYRIGHT,  1882,  BY 
FOWLER    &    WELLS. 


r4 


"''::*'■ 


CONTENTS. 


CHAPTER   I. 


Intkoductory. 


Pages  13  to  18. 


CHAPTER    II. 

.  ON  THE    SELECTION   OF    A   BUSINESS. 

The  four  points  requiring  attention.  Knowledge  of  Details; 
Losses  come  through  Ignorance;  Anecdote;  Ignorance  of  De- 
tails—how remedied  in  part.  Amount  of  Capital  necessary ; 
^Mien  sales  are  for  cash;  When  on  credit;  When  partly  cash 
and  partly  credit ;  Starting  business  without  Capital ;  Friendly 
creditors;  Ten  and  thirty  day  credits.  Liking  for  the  busi- 
ness- Conscientious  scruples;  Respectability  of  the  business; 
Mere  love  for  it  not  suffident.  Business  selected  ought  to 
be  profitable;  This  may  be  estimated  from  others'  success; 
Periods  of  expansion  and  contraction ;  Calculations  for  es- 
timating profits;  Turning  stock  often;  Reason  why  Cash 
Traders  often  sell  much  cheaper  than  Credit  Traders ;  Making 
money  from  the  start.  Pages  19  to  39. 


CHAPTE-R    III. 

ON   THE   CHOICE    OF    A   LOCALITY. 

What  the  Business  Location  must  depend  on;  Extent  of  the 
population;  The  present  supply  ;  Prospects  and  nsks  m  large 
towns- Advantages  of  smaller  places ;  Desirable  Locations; 
The  best  Location  in  the  town.  Convenience  to  Customers; 
A  rumseller'3  good  Location;  Buying  out  an  old  dealer; 
Good  will— and  how  to  buy  it;  Swindling  verdant  beginners; 
Removal  from  one  locality  to  another ;  Disrupting  social  ties. 

Pages  40  to  50. 


9 


CONTENTS. 


CHAPTER    IV. 

ON    BUYING    A    STOCK    OF    GOODS. 

Taking  note  of  the  kind  of  Goods  used ;  Prevailing  Styles ; 
Quantity  of  Goods  required  ;  Purchasing  choice  goods ;  mak- 
ing out  a  list;  Special  Details  that  are  necessary;  Plan  when 
Details  are  impossible  ;  The  "guessing"  method;  Feeling  the 
way  along ;  Danger  of  buying  at  random.  The  amount  of 
credit  required — how  calculated ;  The  length  of  credit  neces- 
sary ;  Long  credit  unprofitable ;  Local  pay  days ;  Gain  in 
Buying  on  short  time ;  One  cause  for  failure.  How  to  buy 
goods ;  Reason  why  goods  differ  in  piice ;  A  good  rule  to 
buy  nearest  the  fountain  head ;  Beating  down  the  price ; 
Anecdote — Countryman  with  his  satchel;  Measure  of  the 
Seller's  complaisance ;  Depreciating  goods  not  wanted. 

Pages  51  to  79. 

CHAPTER    Y. 

OBTAINING    CREDIT    ON   PURCHASES. 

Credit  founded  on  confidence ;  What  gives  confidence  ;  Capital ; 
Business  ability ;  The  risks  of  the  Creditor;  Fortunes  made 
without  capital ;  How  credit  is  to  be  obtained  ;  Making 
statements ;  References  ;  Recommendations ;  Personal  intro- 
duction to  credit — Its  advantages  and  dangers ;  Discredited 
Classes  and  Localities— Jews,  Irishmen,  Frenchmen;  Credi- 
tors'prejudices ;  Anecdote — The  Michigan  man;  A  Retailer's 
experience;  Befriending  a  Friend ;  Written  Statements,  their 
effect;  Cautions  about  them;  Confidential  Capital;  The  tech- 
nical meaning  of  words  used  ;  Anecdote — "  At  the  risk  of 
the  business ;"  Difference  between  Oral  and  Written  State- 
ments. Confidence  in  one's  success  necessary  in  obtaining 
credit.  Pages  80  to  97. 

CHAPTER    YI. 

EXAMINATION,    MARKING    AND   ARRANGING    OF    GOODS. 

Noting  deficiencies,  damages  and  errors;  Comparing  the  goods 
with  the  invoice ;  Giving  early  notice  of  damage.  Marking 
cost  and  selling  price ;  Convenient  cost  marks  ;  Adding  charges 
to  first  cost;  The  rate  of  profit;  Must  not  always  be  gov- 
erned by  others ;  How  averaged  on  the  goods ;  Leading  ar- 
ticles ;  Necessaiy  precaution  in  rating  profits.  Keeping  the 
goods  in  order;  Affixing  the  price  mark  ;  Keeping  goods  pro- 
tected ;  Convenience  to  be  regarded ;  Best  light  to  show- 
goods  in ;  Modifying  inferior  lights  ;  Dark  stores  ;  Learning 
the  details.  Pages  98  to  117. 


# 


"^ 


CONTENTS.  • 

CHAPTER    VII. 

ON    ADVERTISING    A   BUSINESS. 

Kinds  of  business  advantageously  advertised ;  Special  and  ex- 
clusive articles  ;  Impolicy  of  deception  in  advertisements ; 
Extent  of  pu])licity ;  Making  the  truth  attractive ;  Taking 
advantage  of  the  advertising ;  Advertising  only  an  auxiliary. 

Pages  118  to  124. 


CHAPTER   VIII. 

EMPLOYMENT   OF    CLERKS. 

How  clerks  are  taught ;  The  way  they  should  be  taught ;  En- 
gagements too  transient ;  Changes ;  Takmg  boys  to  learn ; 
Untenable  objections  to  this  method;  Judicious  liberality  to 
clerks;  Maintaining  subordination;  The  clerk's  necessities 
considered ;  Getting  rid  of  incompetents. 

Pages  125  to  133. 


CHAPTER    IX. 

ON  THE  ART  OF  SELLING  GOODS. 

Business  compared  to  a  steam  engine;  Sellmg  the  goods  the 
steam-the  great  requisite ;  Qualifications  of  a  good  sales- 
man ;  Influences  which  attract  or  repel  buyers ;  Anxiety  to 
make  sales;  Diflference  in  character  of  buyers ;  1  he  suspicious 
customer;  Deference  to  customers ;  Anecdote— Disarming  the 
customer's  suspicions ;  The  rude  customer ;  Exhibiting  goods ; 
Talking  too  much ;  Proprietor  the  best  salesman. 

^  Pages  134  to  148. 


CHAPTER    X. 

BELLING    GOODS    FOR    CASH. 

Reasons  why  a  cash  business  is  best ;  Two  sides  to  a  cash  busi- 
ness; Reasons  why  goods  are  clieaper  lor  cash;  Cash  aad 
credit  transactions  compared  ;  Avoiding  the  cred.t  guaranties ; 
One  reason  why  European  goods  are  cheaper. 

Pages  140  to 


8 


CONTENTS. 


CONTENTS. 


9 


CHAPTER   XI. 

SELLING   GOODS    ON    CREDIT. 

Must  personally  know  those  trusted ;  References  and  statements 
insufficient ;  People  that  are  dangerous  to  trust ;  Those  that 
are  safe ;  Grades  of  risk ;  More  reliance  on  possession  than  ex- 
pectations— anecdote;  The  extra  profit  required  to  cover 
losses ;  The  speculative  periods— Causes  for  them ;  Risk  of 
any  fixed  estimate  of  loss;  Changes  in  the  responsibility  of 
customers;  Influence  of  rival  stores  on  credit';  Classifying  the 
risks  ;  Influences  impoverishing  customers ;  Temptations  to  ex- 
tend credits ;  Limiting  the  amount  trusted  out ;  Advantage 
of  prompt  collections ;  Specific  term  of  credit ;  Anecdote — 
The  "lucky  "  and  "  unlucky  "  retailer ;  The  way  the  "  luck " 
came.  Pages  158  to  178. 


CHAPTER   XII. 

SELLING   FOR   CASH    AND   CREDIT   COMBINED. 

Difficulty  of  doing  an  exclusive  cash  business;  Relative  jDro- 
portion  of  cash  and  credit  considered ;  Difficulty  of  main- 
taining the  proportions;  Influences  turning  cash  trade  into 
credit  trade — How  to  meet  them ;  Results  when  not  over- 
come— hard  times ;  The  rock  on  which  young  beginners  often 
split;  Practical  illustration  of  such  a  two- fold  business;  Cir- 
cumstances which  overturn  calculations ;  Making  reductions 
in  price  for  cash ;  Rate  of  difference ;  Short  credit  sales — 
Their  risks — Exceptions  ;  Good  way  to  keep  account  of  them  ; 
Refusing  credit  courteously;  Offering  credit  thoughtlessly; 
The  creditor's  best  guaranty.  Pages  179  to  196. 


CHAPTER    XIII. 

ON   REPLENISHING    STOCK. 

Periods  in  which  to  replenish;  Time  of  greatest  supply  and  of 
greatest  demand ;  Influence  of  fashion ;  New  inventions ; 
Buying  out  of  season;  Timid  buyers  caught ;  Loss  in  reduc- 
ing stock  too  low;  Keeping  memorandum;  Looking  ahead; 
Profits  of  buying  new  styles ;  Their  risks  ;  Experimental  pur- 
chasing; Good  judgment  better  than  prejudice;  Risk  in  buy- 
ing cvepy thing  asked  for — Anecdote ;  Ordering  goods  by  let- 
t*Hr;  Importance  of  giving  full  details ;  Three  styles  of  order 
exemplified;  Ordering  from  samples;  Returning  goods  that 
do  not  suit.  Pages  197  to  20G. 


fh 


CHAPTER    XIV. 

SETTLING   POR   PURCHASES. 

Mercantile  standing  depends  much  on  the  way  it  is  ^one ;  grv- 
ing  notes  in  settlement ;  Propnety  of  it;  ^.^asons^  J  ^^^^^ 
dnnotffive  them;  Advantage  m  givmg  them  Conloimmg 
fo  the  filtoms  of  the  trade;  Changes  in  the  knoun  leru.s 
of  the  ^a^e-How  obtained-And  when ;  Meeting  the  obliga- 
tions Payment  of  interest,  and  exchange  or  discount  on  un- 
cun^nt^  money;  Anticipating  V^yr.ent--W^en^^^^^ 
What  payments  to  anticipate.  Pages  207  to  21b. 

CHAPTER   XY. 

ON   THE    DEPRECIATION    OF    GOODS. 

Intrinsic  and  ornamental  qualities  in  goods  considered;  The 
three  causes  of  depreciation;  Introduction  of  improved  ar^ 
tides;  Changes  of  fashion  ;  Decay,  waste  «&c.-How  to  a^old 
1£  lossesfprotections  against  the  n^ks^;^Lo^^oft™  d.- 

guised. 

CHAPTER  XVI. 

LOSSES   BY    FIUE,    THEFT,    NEGLECT,    ETC. 

The  mvsterious  leaks ;  Result  if  not  cared  for ;  Risks  of  fire 
from  Sn'- From  lights;  Sale  of  inflammable  articles; 
leepingTeU  insured  ;  The  '«  conditions  "  of  the  insurance 
Bolicv  The  best  saf^l^guards  against  burglars,  shop-lifters 
ffi'reet  thieves.  Peculations  and  dishonesty  of  employees ; 
TheclerkVtemptations--First  steps  in  cime;  The  employers 
guard'an  duty^  Stealing  for  vicious  indulgence.  Losses  by 
over  wdght  an^  Omissions  to  charge  goods-  How 

^v^S'lmportance  of  caring  for  all  ^^l^l^  ^l^^ 
ness. 

CHAPTER    XYII, 

KEEPING  ACCOUNTS. 

The  obiect  in  keeping  accounts  ;  Importance  of  understanding 
themfFietitious  fccounts;  'Anecdote-The  book-keeping 
nS  to  be  preferred;  Fundamental  rule  in  book-keepmg; 


10 


CONTENTS. 


The  time  to  charge  goods  ;  Entering  counter ;  Detecting  arith- 
metical errors ;  Omissions  to  give  credit  for  purchases  ;  Origin 
ot  many  false  pretense  cases  ;  The  invoice— Its  examination; 
Ma>ing  claims;  Good  plan  of  noting  errors,  etc.,  in  invoice; 
Account  of  goods  received  without  invoice  ;  Anecdote — The 
deceived  retailer ;  Keeping  account  of  cash  sales ;  The  ticket 
plan — Its  advantages  and  management ;  Making  up  cash  ac- 
count; Writing  up  books  daily;  Danger  if  not  done;  mem- 
orandum book  of  accounts  receivable ;  The  maturity  of  an 
indefinite  credit ;  Summary  of  daily  cash  and  credit  sales ;  In- 
ventory ;  yearly  account  of  sales ;  Useful  items  to  record  for 
reference ;  The  end  and  aim  of  book-keeping. 

Pages  249  to  270. 


CHAPTEE  XYIII. 

EXPENSES. 

How  expenses  are  kept  down  ;  True  liberality ;  True  economy  ; 
Wasteful  saving;  The  rate  expenses  should  bear  to  profits; 
Private  expenses ;  Living  within  the  income ;  Extravagant 
living  main  cause  of  failures ;  Arrange  to  save  something 
yearly;  Easier  to  increase  than  decrease;  Stem  necessity's 
reductions;  The  dealer's  temptation  to  extravagance;  Anec- 
dote of  a  retailer's  wife  ;  Advantage  of  a  private  purse ;  Self- 
deceptions  ;  A  good  method  in  small  concerns  to  limit  ex- 
penses ;  Importance  of  economy  to  the  beginner. 

Pages  271  to  2S0. 


CHAPTER    XIX. 

ir 

COPAKTNERSHIPS. 

Object  of  a'  partnership ;  Of  many,  one ;  What  is  required  in 
a  partner  ;  Division  of  labor ;  Deception  in  partners ;  Diver- 
sity of  gifts ;  Harmony  of  views ;  Each  partner  responsible 
for  his  division;  Too  much  independence;  Necessity  for  a 
leading  mind ;  Avoiding  causes  of  disagreement ;  Social  uni- 
formity desirable  ;  Desirable  partnerships  ;  Partnership  some- 
times absolutely  necessary ;  Importance  of  a  written  agree- 
ment ;  Dissolution  ;  Buying  out ;  Providing  for  the  liabilities ; 
Division  of  the  assets  — How  made  equitably;  Seller's  rule  for 
valuing ;  The  buyer's  rule  j  Valuing  articles  in  use. 

Pages  281  to  298. 


CONTENTS. 

CHAPTER   XX. 


11 


>  t 


INFLUENCES   OF    SOCIAL    LIFE    ON   BtTSINESS. 

Family  influence;  Influence  of  friends  and  acquaintances ;  Mem- 
Tership  in  associarions ;  Enlarging  the  circle  of  acquaintance ; 
-     The  leading  store;   Leading  people;  Injurious  social  influ- 
ences; Cliques;  Neglecting  business ;  A  dealer's  ambition  in- 
fluenced ;  Dealer's  influence  socially,  shall  it  be  for  good  or 
for  evil?  Keeping  up  the  standard  of  commercial  probity. 

Pagfa  299  TO  306. 


CHAPTER    XXI. 

ON   BUYING   GOODS   AT   AUCTION. 

Its  advantages ;  Limits  to  these  ;  Art  in  buying;  Lines  of  goods ; 
Anecdote  of  inexperienced  buyer;  Requisites  of  a  good  auc- 
tion buyer ;  Estimating  the  value  of  the  goods ;  Great  differ- 
ence in  value  of  goods  of  same  cost ;  Fluctuations  in  pnce 
and  causes  thereof ;  Marking  catalogue ;  Buying  on  another  s 
iudgment;  Choice  of  lots,  how  to  secure  it;  Intimacy  with 
the  auctioneer;  management  of  the  bidding;  The  "choice 
and  privilege,"  how  managed ;  Knowledge  ot  the  competi- 
tors- Duplicate  lots;  The  auctioneer's  silence;  Running  up 
the  price;  The  starting  bid;  Frequent  bidding ;  Mock  auc- 
tions—Their  pecuUar  features.  Pages  307  to  324. 


CHAPTER   XXII. 

investment    of   THE    PROFITS    OF    BUSINESS. 

Necessity  of  first  having  the  profits;  When  they  may  be  safely 
withdrawn;  Temporary  investments;  A  few  experiences; 
Building  a  store,  a  hotel,  a  manufactory— Lumbering ;  the 
lesson  to  be  learned ;  Bonds  and  mortgages ;  Accumulation  of 
interest;  Real  estate  investments;  Advantage  of  inconvertible 
investments ;  Danger  of  keeping  everything  at  risk. 

'         ^  Pages  325  to  339. 


12 


CONTENTS. 


CHAPTER   XXIII. 

INSOLVENCY. 

Necessity  for  this  chapter ;  Bankrupt  laws  considered ;  Society's 
law  for  the  insolvent ;  Duty  of  charity ;  Exemptions ;  The 
Mosaic  law;  The  retailer  in  failing  circumstances;  Twelve 
objections  which  creditors  often  make  to  compromising; 
What  the  insolvent  iiiay  retain;  Objections  considered;  1. 
Ought  to  have  stopped  sooner ;  2.  Too  much  confidential ;  •  3. 
Owes  me  too  much ;  4.  Never  made  anything  by  him ;  5.  My 
debt  should  be  made  confidential ;  C.  Knew  he  could  not  pay 
when  he  bought  the  goods ;  7.  Deceived  me  by  false  state- 
ments ;  8.  Owes  me  more  than  he  ought ;  9.  Does  not  fully 
account  for  his  failure;  10.  Can  not  pay  what  he  proposes; 
11  Payment  of  compromise  too  remote;  12.  Is  too  unprinci- 
pled to  be  trusted  to  settle  his  estate— Lawsuits  imminent; 
Counselling  with  creditors;  prepared  for  emergencies;  Com- 
promise made— what  follows;  The  dilemma;  Getting  new 
capital;  Realizing  the  change  in  circumstances;  Reducing 
the  business;  Easy  state  of  finances  deceptive;  Struggling 
along ;  Need  of  some  better  rule  or  custom  for  the  insolvent. 

Pages  340  to  379. 


CHAPTER    XXIY. 

BUSINESS    QUALIFICATIONS. 

The  peculiar  qualities  required;  Knowledge  of  the  goods; 
Energy  —  Perseverance —  Decision — Promptness — Economy — 
Knowledge  of  human  nature — Good  memory  of  details — 
Aflfability— Foresight— Enterprise.  Pages  380  to  392. 


APPENDIX 


Mercantile  Problems, 
"         Forms, 


Pages  393  to  403. 
«       404  TO  406. 


' 


1 


THE  RETAILER'S  MANUAL. 


CHAPTER     I. 

INTRODUCTORT. 

THIS  book  is  designed  mainly  as  a  text-book  on  the 
art  of  baying  and  selling  goods  at  retail,  and  naturally, 
in   writing    it,    the   .vriter   has   kept  in   view    the  de, 
ficiencies  of  the  young  and  inexperienced.     Those  who  are 
experienced  in  the  trade  may  think  the  book  unnecessary 
th^t  it  only  tells  them  that  two  and  two  are  four,  or  such 
simple  truths,  which  they  learned  eariy  in  Ufe      It  really 
professes  to  do  no  more  than  gather  together  the  experi- 
ences  of  the  author  and  of  some  of  his  circle  of  acquamt- 
ances,  and  condense  them  in  a  form  convement  to  guide 
and  instruct  those  who  are  starting  out  in  life.     And  it  the 
experienced  men,  who  find  nothing  new  in  it,  find  that  it 
truthfully  sets  forth  the  way  in  which  they  would  g?,  i« 
with  the  light  of  their  experience  they  had  the  path  to 
travel  over  again,  they  find  in  it  all  that  the  author  ex- 

oects  them  to.  .       ,      i  •  „ 

Experience  is  a  good  teacher;  but  his  school  is  a  very 
expensive  one,  and  many  of  his  lessons  may  b/  economi- 
cally and  advantageously  studied  in  a  book  of  th.8  kind, 
and  gotten  by  heart  before  we  go  into  his  school. 
The  most  simple  truths,  too,  sometimes  fail  of  their 

4« 


14 


INTRODUCTORY. 


INTRODUCTORY. 


15 


proper  influence  at  first,  beeauee  we  do  not  see  how  they 
apply  to  any  contemplated  action  until  we  are  taught  by 
experience ;  and  it  is  a  further  aim  of  this  book  to  make 
the  influence  of  these  simple  truths  on  the  ordinary  opera- 
tions of  business  more  apparent,  through  the  various 
illustrations  and  exemplifications  used,  so  that  the  youthful 
student  may  have  some  knowledge  of,  or  at  least  some 
preparation  for,  the  lessons  he  may  have  to  learn  before 
he  enters  the  school  of  experience. 

In  looking  over  the  catalogues  of  our  libraries,  we  find 
text  books,  and  manuals,  and  guides,  on  nearly  every  sci- 
ence and  occupation  in  which  man  engages,  except  this 
one ;  and  when  we  reflect  upon  it,  it  must  really  be  re- 
garded as  a  strange  omission  that  such  a  book  has  not  long 
since  been  written. 

Considerable  libraries  on  each  of  the  subjects  might  be 
collected  of  divinity,  law,  medicine,  surgery,  chemistry, 
banking,  navigation,   architecture,    engineering,    military 
art,  metallurgy,  mining,  agriculture,   cookery,  manufac- 
tures, and  mechanic  arts,  by  the  aid  of  which  the  inex- 
perienced clergymen,  advocate,  physician,  surgeon,  chem- 
ist, banker,  sailor,  builder,  engineer,  soldier,  foundryman, 
minei,   farmer,    cook,    manufacturer,   or    mechanic   may 
qualify  himself,  and  through  the  help  thus  derived  from 
the  experiences  of  others,  can  more  surely  and  readily 
obtain  success  in  his  occupation.     Indeed  to  such  special- 
ities do  these  investigations  extend  in  some  of  the  sciences 
and  arts,  that  works  are  written  on  even  one  little  branch 
of  the  subject,  and  we  have  treatises  on  the  eyes,  the  skin, 
the  use  of  one  single  remedy  in  curing  disease ;  books  on 
the  art  of  gauging,  of  book-binding,  of  quarrying  stone, 
of  weaving,  of  painting  and  gilding,  of  dyeing,  of  soap 
making,  of  brewing,  and  even  on  the  u«e  of  one  particular 
style  of  arch  in  building,  with  a  hundred  other  matters 


% 


TT 


of  such  limited  use  that  probably  not  one  in  a  hundred 
thousand  of  the  people  have  any  interest  in  them.  But 
in  all  our  libraries,  whether  public  or  private,  we  look  in 
vain  for  any  hand  book  or  text  book  wherein  one  may 
learn  something  about  the  occupation  of  a  retail  dealer, 
though  probably  one-tenth  of  the  community  are  more  or 
less  engaged  in  that  business. 

True,  there  are  several  good  works  on  the  general  sub- 
ject of  business,  whose  existence  should  not  be  ignored,  but 
they  treat  of  business  in  general  terms,  and  do  not  go 
sufficiently  into  the  details  of  the  subject,  to  be  valuable  to 
the  novice.  They  present  the  theory  or  principles  of  busi- 
ness rather  than  the  practical  details ;  and  are  necessarily 
more  useful  to  the  experienced  man,  who  desires  to  test 
and  arrange  his  experiences,  so  as  to  learn  the  most  he  can 
from  them,  than  they  are  to  those  who  are  entirely  with- 
out experience. 

Some  of  this  reticence  among  those  who  are  capable 
may  be  the  effect  of  a  sort  of  free-tnasonry,  which  regards 
such  information  as  the  secrets  of  trade,  not  to  be  divulged 
to  the  world  generally,  lest  too  many  be  allured  into  the 
occupation.  Others  perhaps  have  remained  silent  because, 
having  had  no  aid  of  the  kind  themselves,  they  believed 
that  those  that  came  after  them,  might  be  best  left  to  win 
success,  through  the  same  hard  knocks  and  rough  experi- 
ences that  they  had  encountered.  Whatever  may  have 
been  the  motive,  the  silence  seems  to  have  been  hitherto 
universal,  inasmuch  as  the  author  has  not,  even  after  some 
investigation,  been  able  to  learn  of  any  book  hitherto 
published  in  this  country,  which  even  proposed  to  fill  the 
blank  that  this  is  designed  to  occupy. 

The  work  has  been  long  contemplated,  and  is  not 
offered  to  the  public  as  the  hasty  observations  and  conclu- 
sions of  the  author,  or  as  the  occupation  of  an  otherwise 


16 


INTRODUCTORY. 


rNTRODUCTORY. 


17 


i 


idle  period,  but  as  the  result  of  frequent  reflection  upon 
the  various  subjects  it  embraces,  during  several  years  of  a 
business  experience.  The  frequent  applications  made  to 
him  by  persons  in  business  for  advice  and  counsel,  and  his 
own  experience  early  in  life,  with  an  inexperienced  business 
man,  led  him  many  years  ago  to  notice  the  ignorance  of 
many  persons  in  the  retail  trade,  about  the  very  rudiments 
of  their  business,  and  to  see  the  necessity  there  was  for 
some  such  text  book,  where  the  unlearned  might  get  the 
information  they  needed,  ou  the  practical  routine  and 
details  of  their  business. 

That  such  ignorance  should  exist  in  this  occupation  need 
not  seem  strange.  Probably  fully  one-half  of  those  now 
engaged  in  its  various  branches  had  no  practical  know- 
ledge of  business  in  the  outset.  And  one-jialf  of  the  bal- 
ance learned  all  that  they  knew  on  commencing  as  a 
clerk  in  the  store  of  some  merchant,  who  had  not  him- 
self any  business  training.  The  *'  universal  Yankee,"  (in 
the  English  sense  of  tha appellation)  while  he  may  confess 
his  ignorance  of  some  things,  always  has  a  strong  and 
abiding  confidence  in  his  natural  ability  to  trade  and 
barter,  *'tobuy  and  sell  and  get  gain,"  in  the  retail,  or 
wholesale,  or  any  other  trade.  He  thinks  he  needs  no 
education  for  that  work  ;  it  is  just  as  natural  to  him  as  it 
is  to  eat  or  drink ;  and  he  is  ready  at  once  to  undertake 
the  management  of  the  largest  retail  house  in  town,  only 
needing  to  be  shown  a  day  or  two,  "  till  he  learns  the 
ropes." 

The  prosperous  mechanic,  so  soon  as  he  has  made  a  few 
hundred  dollars,  leaves  his  bench ;  the  dissatisfied  farmer's 
son,  with  his  inheritance  in  hand,  drops  the  i)lough ;  the 
venturous  sailor,  tired  of  the  storm  and  calm,  sells  his 
bark  and  quits  the  wheel ;  sometimes,  too,  with  them  the 
learned  professor,   the   sage   physician,   the  over-tasked 


/ 


X 


X 


clergyman  throw  down  the  insignia  of  their  profession, 
and''  without  a  month's  preparation,  venture  their  means 
in  some  business  enterprise,  requiring  an  intimate  acquamt- 
ancc  with  details,  which  long  experience  or  study  alone 
can  give,  before  success  can  be  considered  even  probable. 
It  is  said  that  not  more  than  four  out  of  every  hundred 
engaged  in  business   are   eventually  successful.    This  is 
doubtless  much  under  the  mark,  unless  the  idea  of  success 
is  very  great  wealth— say  $100,000  or  over.     The  author's 
own  experience  leads  him  to  believe  that  about  fifteen  per 
cent  of  those  who  retail  goods  succeed  in  making  suf- 
ficient to  enable  them  to  quit  business  by  the  time  they 
are  fifty  years  of  age ;  that  twenty -five  per  cent  more 
continue   on  successfully,    making  a  living  and   always 
paying  their  debts  to  the  ends  of  their  lives ;  and  that 
the  remaining  sixty  per  cent  either  entirely  fail,  and  go  out 
of  business,  or  make  some  compromise  with  their  creditors 
and  continue  on  with  varying  success  afterwards.     But 
even  this  proportion  of  failures  is  enormous  when   com- 
pared with  the  results  in  other  pursuits.     And  yet,  have 
we  any  reason  to  wonder  at  it,  when  men  engage  in  the 
business  so  ill-prepared  for  its  risks  and  disasters  ?     Hard- 
ly any  sane  man  would  undertake  the   practice   of  law 
or  medicine  without  months,  at  least,  of  previous  study, 
or  engage  in  the  manufacture  of  any  article  without  a 
long  experience  in  its  details.     The  art  of  buying  and 
selling  goods  at  retail,  requires  quite  as  much  study  as 

either  of  them. 

The  most  of  such  inexperienced  people  enjoy  a  very 
encouraging  hope,  which  leads  them  to  believe  that  they 
will  soon  learn  all  that  is  necessary.  They  do  indeed  learn, 
but  it  is  years  often,. before  they  possess  the  knowledge 
that  they  ought  to  have  had  when  they  commenced.  This 
want  of  knowledge  makes  even  limited  success  barely 


18 


INTRODUCIOUT. 


i 


possible  for  the  first  two  or  three  years  of  business,  and 
these  first  years  very  often  give  the  character  to  the  whole 
business  career. 

While,  as  before  remarked,  this  work  is  written  mainly 
for  the  inexperienced,  it  is  believed  that  it  can  be  rend 
with  profit  by  many  of  those  who  have  spent  their  lives 
in  business.  The  author  puts  forth  no  claim  to  superior 
knowledge  over  others  of  like  experience,  but  it  need  not 
be  considered  an  assumption  to  say,  that  in  business  affairs, 
as  indeed  in  most  other  matters,  each  man's  experience  dif- 
fers in  some  points  from  others,  and  therefore,  the  wisest 
can  still  learn  something  from  the  career  and  history  o^ 
other  men's  experiences.  And  even  if  this  information 
only  brightens  and  revivifies  old  and  inactive  ideas  and 
energies,  it  is  useful. 

So  long  as  we  see  the  many  instances  whicli  occur  of 
men  long  experienced  in  business,  failing  we  may  properly 
conclude,  that  all  is  not  yet  known  that  can  be  known  by 
even  the  experienced,  and  that  it  is  quite  probable  that 
many,  who  by  reason  of  the  length  of  time  they  have 
been  in  business,  the  world  regards  as  wise  and  skillful 
in  managing  their  affairs,  have  yet  much  to  learn. 

It  is  indeed  believed  that  this  book  will  repay  perusal 
by  those  who  never  expect  to  engage  directly  in  the  retail 
business.  To  some  extent,  men  of  all  pursuits  are  inter- 
ested in  many  of  the  questions  herein  considered.  The 
farmer  and  mechanic  have  both  to  buy  and  sell,  and  much 
of  their  prosperity  depends  on  their  doing  these  properly. 
The  professional  man  has  at  least  to  give  credit  and  make 
collections,  and  very  many  of  them  may  learn  something 
about  these  subjects  herein. 

In  short,  therefore,  the  book,  though  primarily  for  the 
inexperienced,  is  regarded  by  the  author  as  worthy  of  a 
perusal,  and  often  a  careful  study,  by  all  persons  engaged 


INTRODUCTORY. 


19 


in  any  vocation  wherein  they  have  to  deal  with  their  fel- 
low men. 

The  critical  reader  may  complain  because  so  many  techni- 
cal words  and  phrases  are  used,  not  always  in  the  sense 
current  in  other  countries,  but  often  as  Americanisms. 
In  this  country  the  word  "  store  "  is  so  generally  used  to 
designate  a  place  where  goods  are  kept  for  sale,  and  the 
word  "  shop,"  used  in  England  in  its  place,  so  generally 
here  confined  in  its  use  to  a  place  where  some  mechanical 
work  is  carried  on,  that  the  use  ot  the  latter  word  in  its 
English  sense,  would  tend  to  confusion  and  obscurity  in 
wridng.     It  may  be  wished  that  all  the  other  technicali- 
ties used  herein  were  as  correct  in  principle  as  the  word 
store  m  the  American  use  of  it,  but  the  writer  did  not 
set  out  to  correct  modes  of  speech,  and  preferred  to  use 
the  current  and  accepted  expressions  in  the  trade,  rather 
than  go  into  any  argument  to  show  their  impropriety,  even 
when  he  may  have  thought  them  improper. 


CHAPTER    II. 

OJf  THE  SELBCnON   OP  A  BUSINESS. 

CHOOSE  a  Business— 
1st  That  you  are  acquainted  with  the  details  of; 
~nd,  For  which  you  have  sufficient  capital ; 

I,    wT-T'""!'  '■""  ^''"^  "  ^'^'t"  <>■•  liking: 
4th,  Wh.ch  gn-es  promise  of  making  somethin<.  more 
than  simply  a  living.  "         ° 

It  is  a  prevalent  idea  among  men  that  are  not  very 

better  than  the  one  in  which  they  are  engaged     Those 
who  are  ever  ready  to  act  on  this  iL  and  m^ke  freluen 
changes,  generally  remain  poor  through  life.  ^ 

This  of  itself  should  show  us  that°  supI,  n„    .  •         • 

rni^miciv- ;r:£i':r  ^  "°"^'"^'°''  -  -^'^-^■ 

"I  make  only  a  very  stinted  living  at  my  business  and 
there  :s  Jones,  and  Smith  and  Crown,  and  nearly  everv 
one  I  see  around  me  thriving,  and  it  is  becau  e  my  1  u  f 
ness  IS  a  poor  one,"  is,  if  not  the  langua^^e  the  tlZJ  t  If" 
many  a  discouraged  tradesman.  Could  Ih  i^Jln 
know  the  tnals  and  vexations  of  those  around  hL  he 
jould  cease  to  envy  them,  and  be  satisfied  to  plod  o„'  in 
dustr,ously  m  his  own  occupation.     Were  the  thoth.s  o" 

ttt  c^htters^s        "T"'"'  ^'"^^''^'y-     "A"  i^  "ot  gold 
tliatglitte.s,    IS  an  old  proverb  that  such  people  mtht 

remember  to  their  great  comfort,  whenever  tr/lee "I;;! 


^OM^   JTeaU/t  is  Accumulated. 


21 


neighbor  giving  outward  evidence  of  a  prosperous  busi- 
ness,  grown  up  almost  like  Jonah's  gourd  in  a  single  night. 

Wealth  is  rarely  accumulated  in  any  other  way  than  by 
persistent  and  continuous  efforts  in  one  direction  ;  and 
then  it  may  seem  long  to  the  anxious  expectant  before 
the  reward  comes.  Spasmodic  and  speculative  efforts  to 
expedite  it  often  do  more  to  retard  than  to  hasten  it,  by 
diverting  the  attention  from  the  sober  and  practical  routine 
of  detail's  essential  to  success,  and  causing  them  to  seem 
dull  and  plodding. 

Fortunately,  in  this  country,  while  there  are  great  differ- 
ences  in  respect  to  the  profitableness  of  the  various  kinds 
of  business,  there  are  very  few  of  them  by  which  an  in- 
dustrious and  prudent  man  can  not  make  money,  not  only 
sufficient  to  support  a  family,  but  something  beyond  as 
an  accumulation  for  his  old  age. 

But  no  prudent  man  w^ould  embark  in  a  business,  ex- 
pecting success,  if  unfamiliar  with  the  details,  or  with  in- 
sufficient capital.  And  though  he  may  have  sufficient 
knowledge  and  capital,  if  the  business  is  one  that  is  dis- 
tasteful to  him  in  many  of  its  details,  or  if  with  all  his 
skill  and  capital  he  can  only  succeed  in  making  a  living, 
he  will  soon  become  lukewarm  and  irresolute  in  conduct- 
in-  it,  and  thus  make  it  less  profitable.  It  is  therefore 
ako  indispensable  to  success,  that  a  man  should  like  his 
business,  and  think  it  the  one  best  suited  to  his  peculiar 
gifts  and  qualifications. 

The  acquaintance  required  for  a  business,  should  not  be 
merely  a  superficial  knowledge  of  the  articles  dealt  m, 
but  should  descend  to  minute  details  of  the  various  quali- 
ties and  the  advantages  and  disadvantages  resulting 
practically  in  the  use  of  different  qualities,  the  causes  ot 
Lcrease  and  decrease  of  supply,  the  periods  of  greater 
and  less  demand  ;  and  also  the  fashion  or  prevailing  taste 


:i  i\ 


22 


I^noH'ledffe  of  S>etaits  lieguired. 


which  in  many  things  governs  or  influences  the  public  in 
the  purchase  of  many  articles. 

Thus,  if  a  man  proposes  to  deal  in  lumber,  he  should 
not  only  know,  and  be  able  to  distinguish,  the  various 
kinds,  as  pme,  spruce,  hemlock,  etc,  but  he  should  also  know 
what  qualities  are  recognized  in  the  trade  as  «  clear  stuff" 
-first," -second,"   or   "third  qualities,"   "box  boards," 
cuUmgs  ,  and  so  forth,  so  as  to  be  able  himself,  if  neces- 
sary, to  assort  a  mixed  pile  of  lumber ;  and  should  know 
these   qualities,   not  only  as  they  are  recognized  in  the 
locality  m  which  he  proposes  to  trade,  but  also  as  they 
may  be  differently  graded  in  rival  markets.     He  ought  to 
know  what  deduction  is  proper  to  be  made  for  any  defect 
m  a  piece  of  lumber  or  board,  by  knowing  for  what  pur- 
pose It  could  most  advantageously  be  used,  and  with  least 
loss.     He  should  know  where  the  different  kinds  of  lum- 
ber  are  obtained,  the  superiority  of  that  from  some  loca- 
lities over  that  which  is  brought  from  other  places,  the 
various  methods  by  which  it  is  brought  to  market ;  some- 
thing of  the  geography  of  the  country,  so  that  as  new 
avenues  are  open  to   transport  it,  he  may  be  amonjr  the 
first  to  avail  himself  of  the  advantages,  and  not,  as  is 
sometimes  the  case,  learn  this  from  some  rival  dealer,  who 
has  enjoyed  a  monopoly  of  the  advantage  of  the  new 
route  for  a  year  or  two,  before  it  generally  became  known. 
In  addition,  he  needs  to  know  the   sizes  and  qualities  of 
lumber  that  are  more  especially  used  by  those  who  will 
be  customers-what  will  be  wanted  by  builders,  what 
by  box  makers,  what  by  cabinet  makers,  what  by  shin- 
builders,  etc.  ^ 

All  this  information  he  could  scarcely  expect  to  acquire 
short  of  three  months  service  in  the  practical  details  of  a 
lumber  yard,  specially  devoted  to  learning,  with  a  view 
of  going  into  the  business. 


H 
If 


Story  of  Stephen  Girard*s  Venture, 


23 


it  will  be  that  much  time  well  expended,  by  any 
young  man  ignorant  of  a  business  he  proposes  to  embark 
in,  to  go  to  some  long  established  dealer,  residing  far 
enough  away  from  the  locality  of  the  contemplated  busi- 
ness to  avoid  uneasy  jealousy,  if  necessary,  and  make 
arranc:c»ments  with  him  to  be  instructed  in  the  details  of 
the  business,  even  by  a  payment  of  money  to  him  if  re- 
quired. 

The  better  a  man  is  acquainted  with  the  details  of  the 
business  in  which  he  is  engaged,  the  greater  is  his  chance 
of  success.  In  truth,  the  man  that  is  ignorant  of  these, 
has  no  right  to  expect  success.  Ignorance  may  take  the 
risk  and  occasionally  win,  but  it  is  not  once  in  ten  times. 

The  oft-quoted,  yet  questionable  story  of  Stephen 
Girard's*  shipment  of  a  large  lot  of  warming  pans  to  the 
West  Indies,  in  ignorance  that  it  was  a  warm  climate,  on 
which  he  was  not  only  saved  a  loss,  by  the  fortunate  con- 
version of  the  articles  into  sugar-dippers,  but  by  which  he 
made  a  great  profit ;  and  other  similar  stories  of  great  re- 
turns resulting  from  ignorant  and  ill-conceived  ventures, 
are  too  often  used  as  arguments  to  induce  credulous  men 
to  invest  their  money  in  some  thing  which  they  know 
nothing  about,  in  the  vain  expectation  that  they  will  draw 
a  prize. 

The  lesson  to  be  drawn  from  them  is,  not  that  "ignorance 
and  rashness  has  at  any  time  a  chance  of  success,  or  is 
preferable  to  prudence,  but  rathei  an  encouragement  not 
to  despond,  even  when  matters  look  discouraging,  and  to 
try  to  find  a  way  out  of  the  difficulty  by  unusual  efforts 
and  ingenuity.  In  another  man's  hands,  less  euterj^rising 
and  managing  than  Stephen  Giraid,  the  warming  pans 
would  haA'^e  remained  simply  warming  pans,  to  the  end  of 
time. 

•  Belated  also  of  othera,    • 


Il  I  j 


li 

in  ! 

Mi  t 


24 


^71   Z/hprqfitable  :Sunness  Operation, 


Absolute  losses  in  business  are  generally  the  result  of 
ignorance.     Every  reader  of  this,  who  has  been  in  busi- 
ness will  concur  with  the  assertion  that  fully  nine-tenths 
of  the  losses  he  met  with  therein,  arose  from  his  i^-no- 
rance  of  something  which  he  could  previously  have  known. 
As  an  illustration  of  this,  an  acquaintance  of  the  author, 
an  importer  of  European  goods,  had  one  season  several 
inquiries  for  a  peculiar  kind   of  satin  vesting,  such  as  he 
had  never  imported,  but  the  value  of  which,  and  the  place 
of  manufacture  on  the  continent,  he  was  well  acquainted 
with.     Ascertaining  from  the  applicants  that  the  article 
was  scarce  in  the  market,  and  much  increased  in  price,  he 
thought  it  a  favorable  opportunity  to  make  a  profitable 
venture  by  ordering  some.    There  seemed  not  much  risk  in 
it,  as  the  article  was  of  a  staple  character,  and  he  ordered 
a  few  cases  to  be  sent  out  as  soon  as  they  could  be  manu- 
factured.    The  goods  speedily  arrived,  but  too  late  for 
that  season's  sale,  and  as  they  were  not  suited  to  the  sales 
of  the  succeeding  spring  season  they  were  held  over  till 
the  summer.     When  shown  to  clothiers,  and  offered  for 
sale,  he  was  surprised  to  learn  that  they  had  not  made  up 
any  such  goods  for  vests  in  years,  and  would  not  purchase 
them  at  any  price.     So  hunting  up  the  same  parties  who 
had  the  year  before  wanted  them,  he  tried  to  sell  them  to 
these ;  but  now  found  for  the  first  time  that  the  goods  had 
been  wanted  the  year  before  for  making  gentlemen's  cra- 
vats of  a  fanciful  style,  and  further  learned  that  the  fash- 
ion   having    changed,    they   were    now  using    quite    a 
different  material,  and   would  not  buy  the  old  style  of 
goods  at  any  price.     Not  having  the  sagacity  to  discern, 
or  invent  any  new  use  for  the  goods,  as    Mr.  Girard  did, 
he  was  forced  to  sacrifice  them  in  the  auction  room  at  a 
heavy  loss. 

Ordinary  prudence,  and  especially  the  experience  of  a 


Jgno7^avce  of  details-' How  liemedied,  -^ 

few  such  losses,  naturally  leads  a  dealer  to  thoroughly 
inquire  into  all  the  minutire  of  every  such  proposed  trans- 
action. But  if  the  want  of  information  about  the  specinl 
goods  proposed  to  be  dealt  in  be  general,  the  cases  of 
Joss  will  be  too  numerous,  and  the  aggregate  of  loss  too 
creat  to  endure  while  the  dealer  is  being  educated.  In 
such  cases  a  deficiency  of  information  may  be  partially 
supplied,  when  the  dealer  has  all  the  other  requisites,  by 
employing  a  clerk  who  is  known  to  be  experienced  in  the 
details  of  the  business  he  would  undertake.  But  this 
should  never  be  considered  suflficient  to  compensate  for 
entire  lack  of  knowledge  on  the  part  of  the  employer. 
It  would  answer  reasonably  well  in  such  cases,  as  where  a 
man  accustomed  to  buying  and  selling  dry  goods,  desires 
to  embark  in  the  grocery  or  hardware  trade.  Even  then 
the  dealer  should  avail  himself  of  his  opportunity  to  learn 
the  business  as  soon  as  possible. 

If  there  should  be  a  total  deficiency  of  experience  in 
buying  and  selling,  in  a  person  having  sufficient  capital, 
he  might  select  to.  advantage  a  partner  having  the  re- 
quired knowledge  without  capital,  and  each  of  the  two 
would  thus  supplement  the  other's  deficiency  to  their 
mutual  advantage. 

When  neither  of  these  substitutes  can  be  obtained,  the 
only  prudent  plan  is  for  the  person  to  spend  suflficient 
time  as  a  clerk,  with  some  one  in  a  similar  business,  to 
learn  the  details  before  embarking  in  it  himself. 

While  actual  and  specific  losses  in  business  are  mainly 
the  result  of  ignorance,  it  sometimes  happens  that  the 
most  carefully  managed  business  will  fail  of  profitable  re- 
sult from  want  of  suflScient  capital.  Hence  the  amount 
of  means  which  any  person  has  to  put  in  must  be 
kept  in  view  in  the  selection  of  the  business.    And  this 


/ 


M 


*v  Amou?U  of  Capital  necessa7y, 

has  reference  not  only  to  the  kind,  but  to  the  extent 
of  It ;  as  an  amount  of  capital  sufficient  to  conduct  any 
particular  business  in  one  locality,  might  be  inadequate 
to  profitably  carry  it  on  in  another. 

Precisely  what  amount  of  capital  is  needed  for  every 
particular  business,  it  would  be  preposterous  for  the  author 
to  attempt  to  say,  bat  a  few  generaj  rules  may  be  given, 
which  will  enable  any  one  to  estimate  with  reasonable 
accuracy  the  amount  needed  in  any  particular  instance. 

Every  business  requires  a  certain  amount  of  stock  to 
be  kept  on  hand.     This  must  either  be  paid  for  in  cash- 
requiring  that  amount  of  capital— or  must  be  bought  on 
credit,  and  for  which  the  dealer  will  be  indebted.     Com- 
nionly  it  is  partly  paid  for  in  cash,  and  partly  owed  for 
But  as  the  fact  of  owing  for  it  implies  the  necessity  of 
obtaining  credit  for  the  amount-and  as  a  man's  credit 
will  depend  very  much  upon  his  capital-it  follows  that 
the  amount  of  his  cash  must  be  considered,  even  when  ho 
buys  partly  or  wholly  on  credit.     Those  who  trust  him 
will  at  least  consider  it,  if  the  dealer  does  not,  and  will 
reqmre  that  it  shall  be,  in  their  opinion,  adequate  to  the 
business. 

If  the  business  is  to  be  one  where  the  sales  will  all  be 
for  cash  down,  the  problem  is  a  very  simple  one.     The 
dealer  has  only  to  keep  a  certain  amount  of  goods  on 
hand.     If  he  can  get  favorable  credit  for  whatever  he 
may  lack  of  sufficient  capital  to  buy  all  for  cash,  he  can 
purchase  the  necessary  quantity.     And  if  he  sells  off  his 
goods  quick  enough  to  meet  the  payments,  he  will  have 
no  difficulty.     But  the  question  will  be,  can  he  sell  his 
stock  so  quickly?    The  answer  will  depend  on  the  length 
of  credit  he  gets,  and  partly  on  his  own  management  of 
the  business  in  making  sales. 
Let  us  suppose  a  case  where  a  man  purchases  a  stock 


^ 


i 


TfTien  Sates  are  for  Cash—  TThen  partly  on  Credit,  27 

of  goods  amounting  to  $10,000,  one-half  paid  for  by  his 
capital  and  the  other  half  on  credit,  at— say  three  months 
time.     Now  if  his  sales  are  at  the  rate'of  $20,000  a  year, 
at  the  end  of  three  months  he  will  have  sold  only  $5,000, 
and  making  due  allowance  for  his  expenses  and  incidental 
payments  out  of  the  amount,  he  will  be  short  of  money 
to  meet  his  bills.    If,  however,  he  had  made  the  purchase 
on  credit  payable  $1,000  each  month,  for  five  successive 
months,  which  would  be  the  same  average  credit,  it  is 
plain   that  he  would  have  an  abundance   of  money  to 
meet  his  payments  from  the  same  amount  of  sales.     Or 
in  the  event  that  he  sells  $30,000  worth  a  year,  he  would 
sell  $7,500  worth  in  the  first  three  months,  and  could  meet 
his  payments  then  without  difficulty. 

AVhen  any  part  of  the  sales  are  made  on  credit,  they 
must  be  omitted  in  calculating  the  amount  of  capital, 
while  they  are  outstanding.  Suppose,  in  the  case  men- 
tioned, one-half  of  the  sales  of  $20,000  a  year  are  made 
on  four  months  credit.  This  would  leave  an  amount  of 
$3,333  dollars  always  outstanding  after  the  first  four 
months  of  the  business,  and  would  require  that  addition 
to  the  capital,  or  additional  credit  to  be  obtained,  and  at 
the  same  length  of  time,  i.  e.  four  months. 

The  reader  will  find  in  the  appendix  a  number  of  prob- 
lems which  he  can  work  out  if  so  disposed,  and  make 
himself  fully  familiar  with  this  subject. 

It  must  in  practice  not  be  forgotten,  that  a  large  mar- 
gin has  to  be  allowed  in  calculations  on  the  payment 
for  goods  sold  on  credit,  in  the  retail  trade.  A  prudent 
man  would  not  want  to  rely  on  more  than  three-fourths 
of  the  amount  trusted  out  being  paid  promptly,  or  to  the 
specified  day,  and  at  some  periods  of  the  year,  and  in 
some  localities,  perhaps  not  so  much.  The  reader  will 
observe,  therefore,  that  a  cash  business  requires  much 


( 


!i 


28 


Capital  in  Cash-- Capital  in  Credit, 


I  * 


less  capital  than  a  credit  one,  and  though  the  profits 
may  be  smaller,  such  a  business  is  less  liable  to  loss  in 
times  of  pecuniary  disaster,  and  requires  less  ability  to 
conduct  it  profitably. 

From  what  has  been  written  above,  it  will  1be  seen 
that  a  dealer  requires  as  much  cash  and  credit  combined 
as  will  equal  the  amount  of  his  stock  of  goods^  and  his 
outstanding  accounts  at  the  period  when  the  two  taken 
together  are  at  the  highest. 

The  instruction  may  be  placed  in  a  clear  form  before 
the  reader  as  follows : 

CAPITAL  IN  -I  ^^^^  ^^^  \  MTTST  TJOTTAT  i      STOCK  OF  GOODS  AND 
CAl-ll  AL.  IxN  ^     (JUEDIT     f  ^^^  KQUAi,  j  OUTSTANDING  ACCOUiNTS. 

The  query  will  naturally  be  made  as  to  what  the  rela- 
tive proportions  of  cash  and  credit  shall  be.  Necessarily 
these  proportions  are  variable,  depending  on  the  ability 
of  the  dealer  to  get  credit,  and  then  upon  the  length  of 
it.  If,  for  instance,  the  $10,000  worth  of  stock  in  the 
case  refei-red  to,  could  not  be  obtained  in  part  on  credit, 
it  would  require  ^10,000  cash  capital  to  pay  for  it.  But 
one  person  might  have  facilities  for  borrowing  a  part  of 
this  amount,  which  would  really  be  another  form  of  credit, 
and  so  could  get  along  with  less  than  the  $10,000  cash. 

If  the  credit  obtained  by  the  dealer  is  long  enough  to 
enable  him  to  sell  the  goods  and  get  the  money  for  them 
in  hand,  before  the  credit  expires,  it  is  plain  that  all  the 
cash  capital  a  dealer  will  require  is  simply  enough  to 
establish  a  credit  with  the  wholesale  dealer. 

What  amount  of  cash  capital  will  be  required  to  es- 
tablish such  a  credit,  will  depend  on  the  retailer's  personal 
advantages. 

A,  though  he  has  not  a  dollar,  may  be  trusted  to  $10,- 
000  worth  of  goods,  through  favor  or  friendship,  or  from 


Starting  'Business  without  Capital, 


29 


confidence  in  his  personal  ability.  B,  with  a  grade  less 
of  personal  advantage,  may  find  that  it  requires  $2,000  in 
cash  at  the  risk  of  the  business,  before  he  can  find  whole- 
sale dealers  willing  to  trust  him  with  the  additional 
$8,000  worth.  C,  still  less  favored,  must  have  $5,000  cash 
before  he  can  obtain  credit  for  the  other  $5,000.  While 
D,  with  $8,000  cash,  and  a  bad  reputation  for  ability,  or 
honesty,  or  even  with  a  negative  reputation,  being  wholly 
unknown,  finds  it  difiicult  to  obtain  the  additional  $3,000 
worth  which  he  requires. 

On  the  whole,  it  may  be  said,  that  ordinarily  a  retailer 
starting  a  business  under  favorable  prospects  as  to  suc- 
cess, and  with  a  good  reputation  for  honesty  and  ability, 
would  be  able  to  purchase  on  credit  an  amount  equal  to 
his  cash  capital.  So  that  if  he  has  $5,000  in  cash  to  pur- 
chase with,  he  could  expect  to  obtain  readily  the  addi- 
tional $5,000  worth  of  goods,  on  the  credit  which  would 
be  ordinarily  given  in  the  trade.  Such  a  proportion  i^ 
generally  regarded  as  a  very  safe  and  prudent  one. 

One-quarter  of  the  amount  cash,  and  three-quarters  of 
credit,  is  the  least  proportion  of  cash  with  which  any  one 
should  undertake  a  business  unaided  by  special  friends 
able  and  willing  to  help  him  in  any  emergency.  Some- 
times a  man  may  have  such  special  friends  in  the  wholesale 
trade,  who  are  willing  to  sell  him  goods  and  take  payment 
as  he  sells  them,  it  being  understood  that  after  a  certain 
time  the  account,  if  not  paid,  shall  run  at  interest. 

The  cases  frequently  quoted  of  men  who  have  made 
fortunes  though  starting  without  capital,  or  with  but  a 
nominal  one,  are  generally  of  this  class.  In  fact,  how- 
ever, the  friend  who  furnishes  the  goods,  in  thif»  liberal 
manner  furnishes  the  capital ;  only  that  instead  of  it  being 
in  money,  it  is  in  goods.  Unless  under  such  circumstances 
as  where  the  crediting  party  has  a  specially  friendly  inter- 


I 


I 


ll 


I    Ml 


I 


r  li 


30 


£Jffcct  of  Ten  and  Thirty  Days  Credit, 


est,  through  family  ties,  in  the  prosperity  of  the  retailer,  a 
credit  of  this  character  is  too  uncertain  to  be  depended 
on,  as  are  also  favors  obtained  by  bank  accommodations. 
Friendly  creditors  of  the  ordinary  character  are  too  often 
so,  only  for  their  personal  advantage  ;  willing  to  be  very 
amiable  and  gracious  when  the  sun  of  prosperity  shines 
bright,  but  exceedingly  anxious  to  secure  themselves,  re- 
gardless of  cost  and  sacrifice  to  the  debtor,  if  things  look 
"  squally."  In  the  same  category  are  bankers  and  bank 
directors,  and  when  the  dealer  learns  that  generally  both 
are  friends  for  their  own  interest,  he  will  neither  rely  so 
confidingly  on  their  help,  nor  complain  so  bitterly  when 
they  decline  longer  to  aid  him. 

No  man  in  his  senses  would  think  of  embarking  in  a 
business  which  would  require  $10,000  capital,  if  he  had 
to  depend  on  the  uncertain  borrowing  of  half  of  it  "  on 
call "  or  at  30  or  60  days,  even  with  chances  of  renewals, 
but  at  the  same  time  with  chances  that  in  any  panic  or 
season  of  distrust  the  favor  of  renewal  would  be  with- 
held, and  he  be  compelled  to  saci-ifice  on  his  stock,  and 
lose  on  his  capital  by  the  breaking  up  of  his  business,  to 
make  good  the  loan.  A  dependence  on  the  favor  of  ordi- 
nary creditors,  or  on  bank  accommodations,  for  means 
permanently  required  in  business,  is  just  as  foolish.  Not 
one  time  in  ten  can  it  fail  of  ruin  to  those  that  try  it. 

Prior  to  the  outbreak  of  the  rebellion,  the  retail  dealer 
in  fair  credit,  could  buy  the  greater  portion  of  his  stock  of 
goods,  on  from  four  to  eight  months  credit.  Since  then, 
credits  have  been  very  generally  limited  to  ten  days, 
thirty  days,  and  two  and  four  months.  It  is  hardly  neces- 
sary to  say  that  the  first  two  are  not  commonly  considered 
as  credit,  being  merely  a  few  days  grace  on  cash  pur- 
chases, to  enable  the  purchaser  to  get  his  goods  home  and 
examine  them.     But  when  the  dealer  lives  in  close  j^rox- 


Likingfor  the  'Business, 


31 


iraity  to  the  market  where  he  buys  his  goods,  thirty,  and 
even  ten  days  may  be  quite  advantageous  to  him  as  a 
credit.  And  it  not  unfrequently  occurs  that  goods  so 
bought  are  sold,  and  the  purchaser  has  the  money  from 
them  in  hand,  before  the  period  of  payment  comes  round. 
Such  brief  credit  transactions,  therefore,  are  well  worthy 
of  being  taken  into  consideration  in  the  calculation  of  the 
relative  amount  of  capital  which  any  particular  busmess 

will  require. 

A  future  chapter  in  this  book  will  be  devoted  to  the 
subject  of  obtaining  credit,  which  may,  perhaps,  be  read 
to  advantage  by  those  who  are  desirous  of  estimating  their 
chances  of  obtaining  a  specific  amount  of  credit  when 
about  embarking  in  business. 

The  next  point  which  demands  our  attention  is  the  love 
for  the  business.     This,  though  not  so  essential  as  the 
preceding,  is  worthy  of  consideration.    It  is  not  so  essen- 
tial because,  ordinarily,  we  are  soon  led  to  like  what  we 
are  making  money  at,  even  though  it  be  slightly  distaste- 
ful at  first.     But  as  we  cannot  surely  know  that  any  busi- 
ness will  result  profitably  before  we  make  a  practical  trial, 
it  is  not  wise  to  avoid  all  consideration  of  this  point. 
When  a  duty  is  unpleasant,  we  go  to  it  reluctantly,  and 
rarely  succeed  in  our  labor  so  well  as  when  we  work  with 
pleasure.    We  all  have  our  tastes,  and  it  is  wiser  to  work 
with  the  current  of  them  than  against  it.    Even  our  pre- 
judices should  not  be  lost  sight  of  in  the  consideration  of 
the  advantages  and  disadvantages  of  any  projected  busi- 
ness undertaking.     One  man  almost  feels  his  soul  contami- 
nated if  his  hands  are  soiled.     Let  him  be  careful  about 
embarking  in  a  business  that  will  require  him  frequently 
to  soil  them.    Another  is  sickened  by  certain  odors  ;  let 
him  trade  in  something  else.    Another  could  not  bear  the 


\ 


r) 


32 


The  Man  makes  the  business  Sbnorable^ 


"  small  talk  "  of  half  an  hour  across  the  counter,  over  a 
few  cents  worth  of  tape  or  needles ;  let  him  seek  a  more 
manly  occupation.  In  short,  select  a  business  that  you 
have  a  liking  for ;  one  that  is  agreeable  to  your  taste, 
both  in  the  articles  dealt  in  and  in  the  customers,  and  thus 
find  pleasure  in  your  occupation,  and  enjoy  your  life  like 
a  rational  creature  as  you  go  through  it. 

Failure  to  attend  to  this  point  is,  however,  much  less 
frequent  than  is  failure  on  the  other  points.  As  regards 
the  great  majority  of  occupations  which  are  considered 
as  honest,  a  person  can  take  pleasure  in  almost  any  one 
of  them  if  he  only  decides  that  he  will  do  so,  and  other 
things  being  satisfactory,  a  man,  and  especially  a  young 
man,  is  not  justified  in  declining  to  embark  in,  or  under- 
take to  learn,  a  business  which  his  older  and  more  exper- 
ienced friends  deem  suitable,  on  any  frivolous  idea  that 
it  is  incompatible  with  his  notions  of  gentility  or  manli- 
ness. I  make  only  one  exception  to  this:  if  the  young 
man  thinks  the  business  injurious  to  the  community,  or 
aiding  dishonesty — as  dealing  in  ardent  spirits,  lotteries, 
tobacco,  gaming  implements,  etc.,  his  conscientious  scru- 
ples should  not  be  overruled.  "What  shall  it  profit  a 
man  if  he  gain  the  whole  world  and  lose  his  own  soul." 

It  is  not  the  business  that  elevates  the  man.  A  noble, 
high  minded,  honorable  man  can  elevate  the  business,  how- 
ever humble  it  may  be.  Indeed,  we  see  this  every  few 
years.  Some  occupation  generally  conducted  by  low, 
worthless  fellows,  which  we  are  wont  to  associate  with 
such  characters  and  consider  contemptible,  is  taken  in 
hand  by  a  man  of  character,  who  infuses  energy,  ability, 
capital,  honesty  and  good  sense  into  his  management, 
and  in  a  few  years  the  whole  reputation  of  the  calling  is 
changed,  and  it  is  recognized  as  worthy  of  the  aspirations 
of  the  refined  and  intelligent. 


yrhat  makes  a  business  Unpleasant.  B3 

» 

Nor  should  a  man  rashly  embark  in  a  business  simply   > 
because  he  fancies  it  an  agreeable  one.    We  are  more  apt 
to  see  the  pleasant  side  of  a  business  when  we  look  at 
it  simply  from  the  outside.    The  disagreeable  work  has 
to  be  done  in  the  back  room.    It  was  the  poet  Burns,  I 
think,  who  tells  us  that  in  early  life  he  had  a  confirmed 
intention  of  becoming  a  tailor.    The  sheltered  in-door  oc- 
cupation of  the  men  of  that  craft,  as  he  saw  it,  by  com- 
parison ^^^th  his  o«n  out-door  exposure,  seemed  the  very 
acme  of  a  happy  life.    No  doubt  many  yomig  men  select 
their  life's  occupation  from  as  narrow  a  view  ot  it  as 

Burns  took.  ,    .     ,  /.    „ 

As  before  remarked,  much  of  the  pleasure  derived  from 
any  business  is  found  in  the  profitableness  of  it,  and  there- 
fore when  the  best  loved  business  ceases  to  be  profitable 
with  most  men  it  ceases  to  be  pleasant.     Should  any  ot 
my  readers  find  themselves  in  this  position,  becoming 
weaned  from  their  former  attachment  to  their  busmess, 
and  on  the  look  out  for  something  more  agreeable,  it  may 
well  be  worth  their  inquiry  as  to  whether  the  waning  love 
is  not  the  consequence  of  the  loss  of  its  former  profitable 
character,  and  if  found  to  bo  so,  to  make  extraordmary 
efforts  to  restore  the  business  to  its  former  prosperity  and 
thereby  regain  the  love  they  once  had  for  it,  rather  than 
rashly  quit  it  for  new  undertakings   of  which  they  may 
lack  the  knowledge  to  conduct  profitably. 

A  few  words  of  advice  may  be  given  to  a  class  of  men, 
some  of  whom  I  occasionally  meet,  who  remam  m  a  busi- 
ness simply  because  it  is  pleasant,  and  they  like  it ;  though 
from  causes  entirely  beyond  their  control,  it  has  ceased  to 
be  profitable,  and  they  can  have  no  prospect  of  ever  again 
making  it  so.  They  are  generally  men  somewhat  ad- 
vanced  in  life  who  thus  cling  to  their  first  love,  but  the 
youno-er  are  also  sometimes  too  slow  to  make  a  change  m 


r 
III 


34 


^^ofttableness  of  a  business 


such  cases.  When  a  man  is  well  in  years,  he  is  not  ex- 
pected to  feel  very  ambitious,  and  if  one  thus  situated  is 
satisfied  that  his  diminishing  business  will  sustain  him  to 
the  end  of  his  days,  it  may  be  wise  to  let  well  enough 
alone.  But  a  younger  man— any  one  under  forty-five 
years  of  age— with  good  health,  ought  not  to  delay  placing 
himself  in  a  position  where  he  may  be  able  to  do  so  much 
better  as  to  be  relieved  from  pecuniary  solicitude  for  his 
future  years. 

And  lastly,  a  business  ought  to  be  selected,  in  whic"h 
there  is  a  prospect  of  making  more  than  a  mere  living. 
Let  the  dealer's  aim  be  to  accumulate  something  for  that 
period  of  life  when  age  may  unfit  him  for  procuring  a 
livelihood.  It  is  pleasant  to  feel  as  we  advance  in  life,- 
that  we  are  year  by  year  laying  up  something  for  the  time' 
of  old  age,  not  only  for  our  own  subsistence,  but  that  we 
need  not  stint  our  contributions  to  the  various  religious 
and  philanthropic  movements  which  have  had  our  aid  and 
influence  in  the  more  active  period  of  our  lives. 

To  positively  foretell  the  profitable  results  of  any  con- 
templated business  is  of  course  impossible.     So  many  cir- 
cumstances beyond  the  control  of  the  dealer,  circumstances 
of  early  or  late  seasons,  of  storm  or  tempest,  of  heat  and 
cold,  of  disease  and  death,  influence  favorably  or  unfavor- 
ably the  result  that  any  precision  is  impossible.  But  though 
we  may  not  be  able  to  calculate  with  certainty,  we  may 
approximate  to  the  true  result.     We  can  calculate  suf- 
ficiently near  to  say,  that  if  everything  occurs  as  usual, 
such  or  so  will  be  the  profit.     Even  if  an  occasional  year 
may  fail  to  yield  the  result  anticipated,  still,  if  we  have 
prudently  and   carefully  made  up  our  estimate,  always 
keepmg  on  the   safe  side,  allowing  a  sufficient  margin 
for  probable  contingencies,  an  average  can  be  struck  near 


May  be  Bsthnated  from  ot heirs'  Success, 


85 


»^i 


r 


enough  for  the  purpose  in  view,  and  which  would  be  suf- 
ficiently safe  data  to  warrant  embarking  in  a  business,  if 
other  things  were  fitting,  of  which  satisfactory  results 
could  be  thus  predicted. 

Somewhat  can   always  be  premised  of  the  profitable- 
ness   of  a  business,   by  the   success    or   experience   of 
others  in  a  similar  business,   and  probably  the  most  of 
those  who  now  commence  a  new  undertaking,  found  their 
expectations  upon  the  successful  career  of  some  acquaint- 
ance.    This  is  a  very  simple  method.     If  A  commenced 
a  certain  business  ten  years  ago  worth  5,000  dollars  and 
is  now  worth  50,000  dollars  more,  made  in  his  business, 
it  follows  that  in  the  period  of  ten  years  the  average  net 
profits  of  his  business  have  been   yearly  5,000  dollars. 
The  danger  of  this  method  arises  mainly  from  the  ten- 
dency in  such  cases  to  look  only  at  the  instances  of  suc- 
cess.   When  the  results  of  the  business  of  a  sufficient  num- 
ber of  dealers,  taking  the  unfortunate  with  the  fortunate, 
can  be  averaged,  the  conclusions  reached  are  more  reliable. 
It  will  then  often  be  found,  that  while  A  has  done  so  well, 
B,  his  neighbor  in  the  next  street  or  village,  is  not  so  well 
off  as  he  was  ten  years  ago.    Though  even  in  B's  case, 
the  cause  for  his  want  of  success  may  be  traced  to  some 
personal  deficiency  or  inattention  to  business  by  which  the 
novice  may  know  his  own  success  will  not  be  endangered. 
Nor  does  it  always  follow  that  because  A  made  50,000 
dollars  in  ten  years  that  the  business  is  profitable  at  the 
end  of  the  ten    years.     The  detailed  history  of  almost 
every  man's  business  will  show  that  there  have  been 
especially  favorable  periods,   sometimes  of  six  or  eight 
years  together  when  everything  prospered,  and  then  again 
a  series  of  years  when  there  was  no  prosperity ;  and  it 
might  possibly  be  that  A  made  all  his  money  in  the  first 
five  years  of  his  business,  and  in  the  last  five,  barely  held 


I 


36 


Expansions  and  Contractions, 


his  own.  In  the  contraction  and  expansion  of  currency 
permitted  in  this  country,  there  would  seem  to  be  a 
periodicity  in  the  whole  business  of  the  nation  ;  having 
its  rise  and  expansion  through  five  to  ten  years,  and  its 
decline  and  contraction  more  forcibly  in  two  to  five  years. 
Such  a  period  of  expansion  began  gradually  to  rise  about 
1830,  continuing  to  1837,  when  the  excitement  reached  its 
height  and  culminated,  turning  with  tremendous  force 
downward.  From  this  time  till  about  1844  business  was 
stagnant.  Then  it  began  to  gain,  and  continued  rising 
witii  but  sUght  occasional  depression  until  1857,  when  the 
expansion  having  reached  a  height  generally  felt  unsafe, 
the  supporting  confidence  was  withdrawn,  and  the  forcible 
contraction  suddenly  began.  In  1860  we  were  just  get- 
ting well  out  of  the  slough,  when  the  rebellion  began  its 
career,  and  all  other  influences  on  business  were  over- 
borne by  this  terrible  calamity.  During  that  period  old 
experiences  were  at  a  discount,  as  they  continued  to  be 
till  the  close  of  the  war  in  1865.  With  the  issuance  of  the 
legal  tender  currency  trade  revived,  and  we  were,  nomin- 
ally, at  least,  prosperous  tiU  1873,  when  another  panic 
occurred,  bankrupting  thousands.  From  that  time  trade 
was  stagnant  till  1879,  when  all  values  seeming  to  have 
reached  the  lowest  point  confidence  was  again  restored,  and 
business  revived.  This  improved  condition  will  doubtless 
continue  for  a  time,  to  be  surely  followed  by  another  crisis 
in  the  uncertain  future. 

A  calculation  of  the  chances  of  success  in  any  new  un- 
dertaking will  therefore  be  imperfect  and  liable  to  de- 
ceive, if  we  do  not,  to  a  large  extent,  take  in  view  the 
general  prosperity  of  the  country.  If  everything  is  seen 
to  be  inflated  in  price,  and  speculation  is  rife  throughout 
the  land,  and  danger  of  a  financial  panic  seems  imminent, 
the  undertaking  requires  extreme  caution.  The  writer 
will  not  go  so  far  as  to  say  that  it  must  be  postponed  till 


Estimating  "Profits, 


37 


a  more  auspicious  period,  as  it  might  then  never  be  un- 
dertaken. In  the  best  of  times  one  can  always  find  croak- 
ers who  think  the  country  is  going  to  destruction,  and 
no  investment  safe,  except  bonds  and  mortgages,  secured 
on  real  estate,  at  not  over  one  half  of  what  it  will  sell 
for  at  sheriff^s  sale. 

Perhaps  for  some  readers  it  may  be  well  to  go  definite- 
ly into  the  particulars,  and  show  how  such  a  calculation 
of  probable  profits  should  be  made.    Where  there  is  a 
good  deal  of  competition,  and  the  gross  profits  on  sales 
are  at  the  lowest,  it  will  generally  require  that  at  least 
four  times  as  much  be  sold  yearly  as  the  stock  of  goods 
kept  amounts  to,  to  make  the  business  profitable.     Sup- 
pose the  gross  profits  to  be  fifteen  per  cent,  four  times 
this  -vill  be  sixty  per  cent  of  the  stock,  which  if  $10,000, 
will  give  a  total  profit  of  $6,000.     If  the  stock  can  be 
turned  over  this  often,  at  this  profit,  and  the  aggregate 
of  profit  is  enough  to  cover  the  expenses  and  leave  a  net 
result  sufiicient  to  satisfy  the  dealer,  the  problem  is  solv- 
ed.   If,  however,  there  are  doubts  of  the  ability  to  sell 
four  times  the  amount  of  stock,  and  it  is  thought  that 
not    over    three    times  the   amount   can  be   sold  in  a 
year,  or  $30,000,  the  total  profit  will  be,  at  the  same 
ratio,  only  $4,500,   and  may  be  sufficient.    Still  if  the 
profit  can  be  increased  to  twenty  per  cent  on  the  goods 
sold,  the  result  will  be  the  same  as  in  the  first  instance. 
The  oftener  the  stock  is,  in  mercantile  parlance,  "  turned 
over,"  the  cheaper  the  dealer  can  afford  to  sell  his  goods, 
and   if  he  can  sell  five  or  six  times  the  amount  of  his 
stock  in  a  year,  and  make  relatively  as  much  profit  on 
his  sales  as  when  he  only  sold  three  times  his  stock,  his 
net  profits  will  be  largely  increased.     One  of  the  ways  by 
which  a  business  frequently  becomes  less  profitable,  is 
through  the  accumulation  of  undesirable  goods,  which 


I 


i 


38 


Tu7'nwff  Stock  O/len, 


are  rarely  sold,  on  account  of  which  the  yearly  sales 
though  i^ossibly  not  reduced  in  amount,  are  largely  re- 
duced in  jiroportion  to  the  stock  of  goods  ke^^t.  The  fol- 
lowing table  will  show  at  a  glance  the  relative  advan- 
tage of  large  sales  in  proportion  to  the  stock.  It  is  made 
up  on  the  basis  of  a  $10,000  stock,  such  as  we  have  been 
calculating  upon,  and  to  make  the  yearly  profit  of  $6,000 
it  is  shown  what  per  centage  of  profits  is  required : 


If  turned 

once 

a 

year, 

sales 

$10,000, 

60 

per 

cent. 

(( 

twice 

(( 

(( 

(( 

20,000, 

30 

u 

ti 

three  times 

(( 

(( 

30,000, 

20 

u 

u 

four 

i( 

tt 

u 

40,000, 

15 

(( 

<t 

five 

(i 

t( 

(( 

50,000, 

13 

(( 

i( 

six 

a 

(( 

(( 

60,000, 

10 

(( 

Instances  are  frequent  where  retailers  tui*n  over  their 
stocks  as  often  as  twelve  times  in  a  year,  and  there  are 
others  who  do  not  turn  their  stock  over  more  than  once. 
The  former  prosper—the  latter  grow  poorer.    In  some 
of  the  old  plodding  localities,  where  the  dealers   never 
expect  to  do  more  than  turn  their  stock  twice  in  the  year, 
making  large  per  centage   of  profits,  a  new  and  enter' 
prising  man  occasionally  starts  up,  who  sells  his  goods 
at  half  the  profits  of  the  old  dealers,  and  grows  rich, 
while  they  stand  wondering  how  he  can  afford  it,  and  pre- 
dicting his  speedy  failure.     A  glance  at  the  table  above 
would  show  such  the  secret  of  making  money  by  sell- 
ing at  small  profits.    It  is  just  as  simple  as  that  the  shoe- 
maker who  requires  a  week   to   make   a  pair   of  boots, 
does  not  thrive  if  paid  twelve  dollars  a  pair,  while  he  who 
by  his  industry  and  labor-saving  appliances  makes  two 
pair  in  a  week  prospers,  though  only  getting  ten  dollars 
a  pair. 

Having,  by  all  the  light  and  information  he  can  obtain, 
thus  arrived  at  a  satisfactory  conclusion,  as  to  the  amount 


Make  Money  from  the  Start, 


89 


he  can  sell,  and  the  gross  profits  he  can  make  for  the  year, 
the  projector  of  the  new  business  should  carefully  set 
down  all  the  outlay  for  rent,  clerk  hire,  tires,  lights, 
freight  on  goods,  incidental  expenses,  and  the  losses  of 
various  kinds,  which  he  will  be  subject  to,  all  of  which 
will  be  from  time  to  time  referred  to  in  future  chapters  as 
we  consider  them  in  a  more  appropriate  connection. 
When  these  are  deducted,  if  there  is  left  enough  of  the 
profits  for  him  to  live  on,  and  make  twenty  per  cent  on 
his  capital,  the  business  promises  well. 

Beginners  in  business  are  sometimes  deceived  by  a  very 
common  idea  that  they  must  not  expect  to  make  any  thing 
the  first  year.  Such  low  aspirations  are  not  commendable. 
A  man  should  start  expecting  to  make  something  from 
the  beginning,  and  although  there  will  generably  be  more 
or  less  expense  attending  the  starting  of  a  new  business, 
which  is  not  required  in  subsequent  years, '  still  there  are 
also  some  advantages  to  the  profits.  The  goods  are  all 
new,  the  proprietor's  energy  is  fresh,  customers  will  give 
the  new  store  a  trial,  at  least,  and  thus  some  things  are 
favorable,  which  may  not  be  so  in  subsequent  years.  The 
author  would,  therefore,  caution  any  one  who  having  gone 
carefully  and  repeatedly  through  all  his  calculations,  and 
finding  them  result  unsatisfactorily  as  to  profits,  is  still 
encouraged  to  undertake  the  business  from  the  idea  that 
"  nobody  expects  to  make  anything  the  first  year ;"  and 
hoping  without  any  sufficient  grounds,  that  future  years 
may  turn  out  better.  Having  gone  a  little  behind  the 
first  year,  he  will  find  himself  in  no  heart  to  struggle  the 
second  one ;  and  will  be  very  apt  to  succumb  entirely  in 
the  third  year,  and  consider  his  business  hopeless. 


'I 


I 


CHAPTER    III. 

ON  THE   CHOICE    OP   A   LOCALITT. 

THE  location  of  a  business  must  depend  mainly  upon 
the  location  of  those  who  are  expected  to  be  customers. 
We  ought  not  to  expect  that  enough  of  them  could  be 
found  in  a  small  v-illage  for  a  business  in  guns  and  ammu- 
nition, or  in  fine  laces,  or  embroideries,  or  in  books 
and  stationery,  or  other  such  specialities.  Such  enter- 
prises as  these  require  that  there  should  be  congre- 
gated, within  a  reasonable  distance,  a  number  of  persons 
using  or  needing  enough  of  the  articles  dealt  in,  to  sup- 
port the  business.  The  first  inquiry  must  therefore  be, 
whether  there  are  enough  people  in  the  vicinity  who  re- 
quire the  articles  that  it  is  proposed  to  deal  in,  to  sustain 
the  undertaking.  The  second  consideration  might  be  the 
present  source  of  supply,  and  how  far  the  new  source  may 
be  able  to  supplant  the  old. 

In  large  towns  there  will  be  but  little  needed  on  the 
first  inquiry.  It  may  be  safely  assumed  that  in  a  town  of 
over  twenty  thousand  inhabitants  there  are  sufficent  cus- 
tomers for  any  of  the  ordinary  business  occupations.  The 
second  inquiry,  as  to  tlie  present  sources  of  supply,  and 
the  ability  of  a  new  concern  to  furnish  a  source  superior 
to  any  previously  existing,  will  be  the  principal  question 
to  be  considered.  But  these  satisfactorily  settled,  there 
are  some  drawbacks  to  business  in  large  towns  that  make 
the  risk  greater  in  doing  business  in  them,  than  in  country 
places.  The  expenses  of  business  and  of  private  living  are 
greater,  and  it  often  happens  that  a  large  portion  of  a 


locating  in  Towns, 


41 


moderate  capital  is  expended  in  rents  and  living,  before  the 
business  is  sufficiently  established  to  pay  any  profit.     In 
large  towns  also,  the  fluctuations  in  business  are  greater 
than  in  villages  and  country  places.      The  inhabitants  of 
larjsre  cities  are  accustomed  to  use  more  of  the  luxuries 
and  superfluities  of  life  than  country  people,  and  in  times 
of  pecuniary  trouble  these  superfluities  are  retrenched, 
causing  many  people  who  obtain  their  living  from  the  man- 
ufacture of,  or  trade  in  such  articles,  to  curtail  even  in  the 
use  of  articles  of  greater  necessity ;  and  it  thus  follows 
that,  to  some  extent,  business  in  all  branches  is  depressed. 
In  country  places  the  expenditure  for  living  is  reduced 
nearer  to  the  minimum  in  the  best  times,  and  there  is 
consequently  less  necessity  for  retrenching,  and  even  if 
the  necessity  for  retrenching  exists,  there  is  less  to  re- 
trench.     Small  towns,  villages  and  country  places  are 
therefore  the  safest  locations  to  commence  a  new  business 
in   with  limited  means  and  limited  experience.      As   a 
general  thing,  it  is  prudent  for  those  only  who  have  large 
means  and  experience,  to  begin  business  in  large  towns 
and  cities — such  as  have  had  a  few  years  profitable  ex- 
perience in  a  small  place,  and  feel  the  need  of  a  larger 
sphere  for  their  operations. 

The*  most  prudent  course  for  a  young  beginner,  is  to 
commence  where  the  expenses  of  his  living  will  be  in 
some  degree  commensurate  with  his  capital — ^not  exceed- 
ing for  the  year  one  fourth  of  it,  or  one  third  at  the 
utmost.  So  that  if  the  business  should  turn  out  unprofit- 
able, the  loss  will  not  be  fell  so  heavily.  There  is  always 
a  larce  risk  where  the  store  rent,  clerk  hire,  and  business 
and  living  expenses  of  the  proprietor  for  the  year,  as  cal- 
culated upon  at  the  outset  exceeds  the  whole  capital  in- 
vested. As  remarked  in  the  previous  chapter,  the  begin- 
ner should  be  ambitious  to  make  something  the  first  year, 


'* 


I 


42 


desirable  Zocations, 


as  a  stimulus  to  his  ambition,  and  a  reward  to  his  enter- 
prise, and  to  make  this  probable,  the*  expenses  of  the 
undertaking  should  be  based  not  so  much  on  the  expected 
profit  as  on  the  present  capital.  What  ought  to  be  look- 
ed for  but  failure  and  misfortune,  by  one  who  takes  on 
such  a  load  of  expense  that  in  the  first  three  months  ho 
uses  up  all  his  capital,  before,  perhaps,  his  business  has 
fairly  commenced.  And  yet  such  undertakings  are  by  no 
means  unusual. 

As  the  business  and  capital  increases,  removal  to  a  more 
extended  sphere  is  frequently  judicious.  The  risks  of 
smaller  places  being  less,  the  general  results  of  a  success- 
ful business,  conducted  in  such  a  place,  when  compared 
with  a  successful  one  in  a  large  city,  will  ordinarily  be 
correspondingly  less. 

Some  of  the  most  desirable  locations  wherein  to  com- 
mence a  business,  are  to  be  found  among  the  enterprising 
people  of  our  young  and  growing  western  towns.  Hun- 
dreds of  successful  merchants  throughout  the  west  owe 
their  fortune  almost  entirely  to  the  happy  circumstance 
of  the  selection  of  such  a  locality  in  which  to  commence 
their  mercantile  career.  Their  business  grew  up  with 
the  growth  of  the  town  in  which  they  were,  and  needed 
only  reasonable  attention,  and  the  avoidance  of  "  specula- 
tions "  to  produce  a  fortune  for  the  proprietor. 

Having  selected  the  town,  the  question  of  the  best  loca- 
tion in  the  town  is  one  deserving  attention.  The  laro-er 
the  town,  the  more  important  it  is  that  the  business  should 
be  on  the  best  street,  and  also  at  the  best  place  on  the 
street.  An  omission  to  regard  this  will  be  quite  as  serious 
as  to  disregard  the  other.  A  location  on  a  street  out  of 
the  line  of  business  travel — or  too  far  up,  or  too  far  down, 
even  on  the  best  business  street — will  often  prove  very 


On  'Principal  Thoroughfare, 


43 


disadvantageous.  Persons  coming  to  trade  in  a  store  so 
located,  will  be  found  to  have  been  in  other  stores  more 
conveniently  or  centrally  situated  on  their  way ;  and  only 
come  to  this  because  they  have  not  been  suited  in  those 
they  first  entered.  The  great  proportion  of  such  cus- 
tomers will  be  found  fastidious,  difficult  to  please  and 
troublesome  to  sell  to  when  they  are  suited;  and  the 
business  which  depends  mainly  on  such  for  support,  is  not 
worth  having.  It  may  safely  be  assumed,  that  for  every 
one  coming  in  this  way,  there  were  half  a  dozen  who  ob- 
tained what  they  sought  in  the  first  one  or  two  stores 
they  entered,  and  returned  home  without  going  near  the 
store  so  inconveniently  located,  and  who  would  just  as 
willingly  have  made  their  purchases  in  it  as  where  they 
did,  had  it  been  as  convenient  to  them. 

There  is,  therefore,  a  great  advantage  in  having  a  loca- 
tion so  convenient  to  the  buyers,  that  when  going  out  to 
make  purchases,  they  come  first  there.  When  fish  go  up 
stream  the  fisherman  who  casts  out  his  net  lowest  down 
the  river,  stands  the  best  chance  of  being  rewarded  for 
his  labors,  as  those  above  him  only  have  their  chance  at 
the  fish  that  escape  his  net.  Still,  we  must  not  lose  sight 
of  the  fact  that  the  best  location  may  be  only  obtainable 
at  a  rate  too  dear  to  be  profitable.  Rash  and  imprudent 
beginners  sometimes  err  in  selecting  such  localities,  re- 
gardless of  the  heavy  rent  or  cost  of  such  choice  posi- 
tions, while  excessively  prudent  men  often  commit  the 
opposite  mistake,  and  take  an  out  of  the  way  location,  be- 
cause the  rent  is  low. 

The  whole  matter  needs  to  be  carefully  thought  over, 
and  all  the  points  duly  weighed.  Sometimes  the  differ- 
ence of  a  single  block  in  distance  along  the  street,  is  of 
consequence,  and  the  merchants  in  one  block  will  be  all 
the  time  busy,  while  those  on  the  next  block  to  them  in  the 


i 


I 


(   L      t 


t  ■    t 


44  A  ^urn-seller's  good  Zocatlon, 

same  street,  are  doing  very  little  trade.    The  plan  of  the 
streets  in  a  town,  the  quarter  in  which  the  customers  re- 
side, and  the  route  they  ordinarily  or  naturally  take  m  get- 
ting into  the  business  location,  should  be  considered.  The 
location  of  the  principal  stores  on  a  business  street  need 
not  always  govern  a  person  in  his  selection,  as  it  frequent- 
ly occurs  in  our  fast  growing  towns,  that  the  business  lo- 
cation,  adopted  as  such  when  the  town  was  smaller,  has 
become  inconvenient,  on  account  of  the  growth  of  the 
town  in  a  direction  different  from  what  was  originally  ex- 
pected.    When  such   a   circumstance   exists,  there  is  a 
question  open  for  consideration,  as  to  the  relative  advan- 
tage of  a  location  in  the  vicinity  of  the  older  stores,  or 
of  one  more  convenient  to  the  residences  of  the  custo- 
mers.    The  magnitude  and  character  of  the  contemplated 
business  might  also  be  allowed  to  influence  the  decision. 
If  it  is  one  complete  in  itself,  giving  a  full  assortment  of 
the  kinds  of  goods  kept,  convenience  to  the  customer 
should  govern ;  while  if  it  is   one  of  limited  character, 
not  comprising  all  that  a  customer  would  likely  desire  at 
the  time  of  going  out  to  purchase,  necessitating  a  visit  to 
some  other  store,  it  will  be  found  preferable  to  make  one 
of  the  crowd,  and  take  the  chances  of  the  old  locality. 

Some  months  ago,  when  traveling,  the  author  stopped 
over  night  at  a  country  tavern,  and  while  sitting  in  the 
bar  room,  was  amused,  and  perhaps  somewhat  instructed, 
in  listening  to  a  talk  between  the  tavern  keeper  and  a 
friend,  who  seemed  to  have  visited  him  to  get  his  advice 
about  the  propriety  of  renting  a  tavern  (or  hotel  as  he 
called  it)  at  the  county  town,  some  few  miles  distant. 
They  had  duly  discussed  the  rent,  number  of  rooms  and 
other  accommodations  for  travellers,  when  the  tavern 
keeper  remarked  that  "there  must  be  a  good  deal  of 
money  taken  in  at  the  bar."    "  Yaas,"  responded  the  visi- 


!Suying  Out  an  Old  Dealer, 


45 


tor,  "thare  was  consid'ble  drinkin'  goin'  on  all  the  time  I 
was  thar,  an'  I  sez  to  myself,  when  I  looked  round  and 
see  the  court  house  and  the  crowd  on  one  side,  and  the 
stores  and  customers  on  tother,  'twas  about  the  hand- 
iest place  in  town  for  a  feller  to  git  a  drink."  He  evi- 
dently appreciated  the  advantage  of  the  location. 

Much  of  the  benefit  to  be  derived  from  a  new  location 
in  a  different  street,  or  further  up  or  down  the  street  than 
where  the  trade  has  hitherto  been  carried  on,  arises  from 
the  cheaper  rents  ordinarily  current  in  such  localities.  To 
obtain  this  benefit,  however,  it  is  essential  that  a  long 
lease  be  secured  at  a  low  rent,  so  soon  as  it  is  ascertain- 
ed that  the  location  is  well  chosen.  This  may  frequently 
be  done  by  taking  a  store  for  one  year,  with  the  privilege 
of  a  longer  term  at  the  same  rent ;  or  with  privilege  ot 
purchase  at  a  set  price,  if  it  be  intended  to  make  the  pur- 
chase. If  this  advantage  is  not  secured,  the  dealer  may 
find  competitors  for  the  lease  of  the  store,  and  the  price 
will  be  advanced  to  him ;  notwithstanding  that  to  a  great 
extent,  it  was  his  business  occupancy  that  made  the  loca- 
tion desirable. 

A  good  location  with  many  advantageous  connections 
is  sometimes  secured  by  buying  out  an  older  dealer,  and 
thus  coming  into  the  enjoyment  of  the  profits  and  advan- 
tages of  an  established  business  at  once,  which  it  has 
taken  years  to  build  up.  Like  many  other  things,  though, 
these  advantages  are  often  bought  too  dear.  At  a  fair 
price  it  may  be  considered  the  best  method  by  which  a 
young  man  can  get  into  business,  but  it  needs  much  cau- 
tion, both  as  to  the  price  and  the  character  of  the  busi- 
ness. If  the  business  has  been  conducted  in  an  irregular, 
thriftless  manner,  it  may  be  more  trouble  to  get  the  cus- 
tomers out  of  their  bad  ways  than  it  would  be  to  make 


46 


Good  mil- 


new  ones.  When  a  man  starts  business  anew,  he  may 
make  almost  any  rules  he  pleases  regarding  credits,  tak- 
ing back  or  exchanging  goods,  etc.  If  they  are  in  ac- 
co'rdance  with  reasonable  and  common  sense  views,  the 
customers  will  submit  to  them,  and  will  not  be  offended ; 
but  when  he  succeeds  to  an  older  merchant,  every  change 
he  makes  in  his  method  of  dealing  with  the  customers  is 
criticized,  and  compared  with  the  old  way,  and  offence  is 

frequently  taken. 

There  is  an  intangible  article  called  "good  will"  gen- 
erally included  in  the  purchase  of  the  stock  of  a  retiring 
dealer,  which  is  supposed  to  be  his  favor— his  commend- 
ation of  the  purchaser  to  his  customers— though  it  gener- 
ally includes  the  customers  themselves,  so  far  as  they  are 
a  transferable  article.  This  "  good  will "  if  really  felt,  is 
of  much  advantage  to  the  purchaser,  for  it  is  in  the  power 
of  the  retiring  merchant,  by  his  influence,  to  aid  mate- 
rially the  new  business,  or  by  his  enmity  to  injure  it.  It 
sometimes  occurs,  though,  that  a  retiring  dealer,  looking 
upon  this  "  good  will "  as  simply  the  transfer  of  cus- 
tomers, or  established  trade,  sells  it,  and  while  openly 
professing  to  commend  his  successor,  does  so  with  so 
many  "buts"  and  "ifs"  that  he  really  injures  the  man's 
trade  more  than  he  could  if  he  were  an  open  enemy.  It 
is  pretty  hard  to  bind  a  man  in  such  things  who  has  no 
conscience  or  sense  of  what  is  just. 

The  author  has  seen  several  instances  of  want  of  good 
faith  in  keeping  an  agreement  of  this  kind,  and  has  gen- 
erally found  the  ground  of  refusal  to  keep  faith  to  be^ 
that  nothing  was  really  paid  for  the  "  good  will."  On 
further  investigation  it  would  turn  out  that  the  retiring 
dealer  had  obtained  a  good  price  for  the  stock,  and  talk- 
ed about  the  "  good  will "  which  he  threw  in  to  make 
the  bargain  good;  and  thus  sold  an  old  stock  of  unde- 


Sow  to  'Buy  It. 


47 


sirable  goods — perhaps  not  worth  over  fifty  or  sixty  cents 
on  the  dollar — at  about  cost.  On  account  of  these  ex- 
periences, the  author  recommends  any  one  proposing  to 
buy  out  an  old  dealer,  to  treat  for  the  stock  of  goods,  and 
for  the  "  good  will"  separately.  So  much  on  the  dollar 
of  cost — fifty,  sixty,  seventy  or  eighty  cents— or  whatever 
their  real  worth  may  be,  for  the  goods,  and  a  certain  speci- 
fied sum  for  the  "good  will."  "Good  will"  so  purchas- 
ed is  more  apt  to  be  real,  as  the  seller  feels  he  has  a  real 
consideration  for  it.  The  "goodwill"  that  goes  with 
the  goods  to  make  them  cheap  to  the  purchaser,  may  last 
till  the  payments  are  made  for  the  stock  of  goods,  but  be^ 
yond  that  is  not  always  to  be  depended  on. 

Many  of  the  questions  considered  in  this  and  the  pre- 
vious chapter,  are  decided  by  this  method  of  commencing 
a  business.  From  the  success  of  the  old  dealer  the  be- 
ginner can  calculate  somewhat  of  his  own  chances.  In 
considering  the  success  of  the  old  dealer,  however,  the 
last  one  or  two  yeai-s  profit  js  of  more  consequence  than 
the  profits  of  a  series  of  years.  The  inquiry  should  be, 
whether  the  business  is  profitable  now,  not  what  it  was 
two  or  three  years  back. 

To  obtain  this  knowledge,  the  amount  of  purchases 
and  the  amount  of  sales,  with  the  gross  profits  and  store 
expenses  of  each  year,  should  be  obtained  from  the  retir- 
ing merchant.  When  the  "  good  will,"  before  spoken  of, 
is  bought,  the  buyer  has  the  right  to  demand  these,  and 
that  they  be  given  truly,  as  they  are  the  data  from  which, 
in  great  measure,  the  value  of  the  "good  will"  is  calculat- 
ed. An  action  at  law  will  lie  against  the  old  dealer  for 
damages  for  any  loss  incurred  by  the  purchaser,  if  he  has 
been  misled  by  false  or  deceptive  statements  about  the 
profits  of  the  business. 

A  few  words  of  special  caution  may  with  propriety  be 


48 


Swindling  Verdant  beginners. 


added,  on  the  danger  of  being  misled  and  deceived  by 
the  person  who  proposes  to  sell  out.  Unscrupulous  men 
sometimes  add  to  their  stock  a  variety  of  trashy  and 
worthless  articles  for  the  sole  purpose  of  defrauding  some 
verdant  buyer.  Bottles  of  common  colored  whiskey 
nicely  labelled  "  Best  French  Brandy,"  and  valued  as 
such.  Tea  of  very  inferior  grade,  or  perhaps  damaged, 
purporting  to  be  the  best  quality,  etc.  Or  the  fraud  may 
take  the  form  of  drugs  and  medicines,  the  adulteration 
of  which  it  is  difficult  to  detect.  Even  the  apparently 
well-thumbed  account  book,  or  prescription  book,  show- 
ing the  daily  business  is  all  a  sham.  But  it  is  glowingly 
advertised  as  a  certain  fortune  to  any  one  who  will  pur- 
chase, and  would  not  be  sold  for  any  consideration,  only 
"  the  owner  has  other  business,"  *'  or  is  in  ill  health,"  or 
"  going  west,"  etc.  Once  in  possession,  the  deluded  pur- 
chaser waits  in  vain  for  the  rush  of  customers,  and  finds 
when  too  late  that  he  has  been  villainously  cheated. 

Known  instances  of  such  deceptions  should  induce  cau- 
tion in  purchasing  from  a  stranger.  Ordinarily  a  profit- 
able business  does  not  go  begging  for  a  customer ;  nor  is 
one  frequently  sold  out  to  a  stranger,  without  some  good 
reason,  such  as  the  death  of  the  proprietor,  his  failure,  or 
the  necessity  of  removal  to  some  other  locality ;  and  some- 
times, though  still  more  rarely,  the  disposition  of  the  pro- 
prietor to  retire  with  a  competence.  In  the  last  case, 
however,  the  proprietor  generally  chooses  his  own  time 
to  go,  and  his  successor ;  and  the  transaction  is  often  re- 
garded somewhat  as  a  favor,  bestowed  either  on  some 
employee  who  has  merited  it  by  faithful  attention  to  the 
business,  or  upon  some  intimate  friend  or  relative. 

A  man  may  have  a  reason  for  selling  out,  sufficient  to 
induce  him  even  to  make  a  sacrifice  to  do  so,  which  an- 
other would  regard  as  insufficient.     Some  men  are  natur- 


Changinp  Zocality. 


49 


ally  timid,  and  having  made  a  moderate  amount,  are  very 
fearful  of  losing  it  at  every  threatening  aspect  of  business 
affairs,  or  at  what  they  think  a  critical  period.  Particu- 
larly has  this  been  the  case  since  the  downfall  of  the  re- 
bellion. And  a  person  of  nerve  and  self-confidence  may 
on  this  account  sometimes  obtain  a  fine  business  position 
and  trade  at  a  very  satisfactory  price.  Unless,  however, 
a  satisfactory  motive  is  apparent,  it  will  be  better  to  leave 
the  purchase  alone.  The  probabilities  are  that  there  will 
be  no  advantage  to  be  the  successor  in  such  a  business, 
and  it  would  be  better  to  start  anew. 


The  subject  of  a  removal  of  business  from  one  locality 
in  a  town  to  another  in  the  same  town,  may  also  be  ap- 
propriately considered  in  this  connection. 

This  ought  to  be  always  of  serious  consideration,  as 
future  success  or  failure  often  depends  upon  it.  In  actual 
business  in  cities,  it  is  probably  more  or  less  dwelt  upon 
every  week  in  the  year,  and  especially  at  about  the  period 
of  annual  house  moving.  If  trade  is  dull  in  the  morning 
of  any  special  day,  the  proprietor  takes  a  walk  up  the 
street  to  see  what  his  neighbor  on  the  next  block  is  doing, 
and  if  he  sees  two  or  three  customers  in  his  store,  he  im- 
mediately agitates  the  subject  of  the  relative  value  of  the 
two  locations  for  business.  And  this  is  kept  up  by  his 
clerks,  who  are  always  ready  to  excuse  their  own  de- 
ficiencies and  inattention,  or  perhaps  incivility  to  their 
customers,  who  go  away  without  purchasing,  by  alleging 
that  "  the  store  is  so  badly  lighted  that  it  is  impossible  to 
sell  goods  to  any  one  who  is  particular,"  or  "  this  is  such 
an  out  of  the  way  place  that  the  customer  has  been  in  all 
the  stores  in  town  before  coming  here."  While  there  may 
be  no  great  loss  in  agitating  the  subject  to  a  reasonable 
extent,  it  is  productive  of  harm  when  it  becomes  a  com- 


1 71 


60 


SHsrupting  Social  Ties, 


mon  excuse  for  every  deficiency  in  sales.  A  good  rule  to 
observe,  when  contemplating  removal,  is  to  look  at  the 
"  balance  sheet "  for  the  year.  If  that  shows  a  fair  pro- 
fit, do  not  be  in  a  hurry— stay  in  the  old  place  another 
year  at  least.  No  matter  if  the  windows  are  small,  and 
the  inside  finishing  old  fashioned,  or  not  fashioned  at  all ; 
or  the  rent  is  too  high,  or  it  is  inconvenient  to  do  business 
in ;  still,  if  the  one  great  result  is  forthcoming — that  the 
business  is  on  the  whole  profitable,  do  not  risk  removal. 
"Let  well  alone"  is  a  good  rule  in  this  matter,  as  in 
many  others. 

When  a  merchant  is  not  thriving  in  his  present  location, 
the  case  is  different.  There  is  no  advantage  in  a  man 
clinging  on  to  one  place,  like  an  oyster  to  a  rock  which 
the  waters  have  permanently  receded  from  and  left  bare. 
Let  such  a  one,  however,  seriously  consider  whether  it  is 
the  location  which  is  the  cause  of  his  want  of  success  or 
whether  it  may  not  be  something  else.  If  he  concludes 
that  it  is  the  former,  he  should  go  as  soon  as  possible. 

These  changes,  when  they  transfer  the  dealer  to  a  con- 
siderable distance,  are  sometimes  very  unpleasant,  owing 
to  the  social  ties  and  connections  which  require  to  be  sun- 
dered ;  but  these  should  not  have  too  much  influence  on 
the  judgment,  when  the  means  of  living  are  at  stake. 
Postponement  in  such  cases  only  increases  the  difficulty, 
makes  it  harder  to  part,  and  tends  to  gradually  reconcile 
the  man  to  remain  and  look  with  equanimity  on  what  will 
probably  sooner  or  later  occur — his  failure  and  insolvency. 
A  house  well  established  in  business,  with  a  large  number 
of  regular  customers,  may  risk  removal  to  a  less  eligible 
location  for  the  purpose  of  reducing  rent,  or  other  pru- 
dential considerations,  but  the  movement  then  should  be 
to  a  location  which  would  be  gradually  improving,  never 
to  one  that  is  gradually  deteriorating. 


CHAPTER   lY. 


ON  BUYING   A   STOCK   OF    GOODS. 

AFTER  choosing  the  location,  the  next  thing  in  order 
is  the  purchase  of  a  stock  of  goods.  To  do  this  properly, 
it  will  be  requisite  first  to  ascertain  what  the  wants  are 
of  those  who  are  expected  to  be  customers,  in  the  partic- 
ular line  of  the  business  contemplated. 

Every  community  has  more  or  less  of  peculiarities  of 
style  in  dress  and  living,  which  must  be  kept  in  view  by 
the  merchant  who  would  purchase  goods  to  supply  the 
wants  of  that  community.  In  one  community  gay  colors 
prevail ;  in  another  a  staid  plainness  predominates.  Certain 
makes  or  qualities  of  goods  are  in  demand  in  one  locality, 
that  in  another  are  seldom  asked  for.  Wholesale  dealers 
in  large  cities,  who  meet  with  buyers  from  various  sec- 
tions of  the  country,  are  required  to  purchase  their  goods 
with  reference  to  this  varied  demand ;  and  hence  where 
they  keep  large  stocks,  there  will  be  found  a  "  southern  " 
style,  a  "  western  "  style,  a  "  country  "  style,  a  "  city  " 
style  ; — with  even  finer  drawn  distinctions,  as  a  "  Broad- 
way "  style,  an  "  Eighth  Avenue  "  style,  or  a  "  Bowery" 
style,  as  the  prevailing  tastes  of  the  different  communities 
require. 

Much  of  a  retailer's  success  will  depend  on  his  ability 
to  catch  and  retain  in  his  mind  the  prevailing  ideas  of 
taste  in  the  community  in  which  he  does  business ;  and 
on  his  purchase  of  such  goods  only  as  naturally  attract  and 
please  his  customers.  It  will  not  do  for  him  to  get  too 
far  ahead  of  his  customers,  in  the  matter  of  taste  and  se- 


52 


l^evaUing  Styles  of  Goods, 


lection  of  goods,  and  think  that  he  can  bring  them  up  to 
his  standard.  He  may,  by  doing  so,  make  his  store  select, 
but  never  popular.  If  his  customers  are  better  pleased 
with  red  and  yellow  than  they  are  with  drab  and  laven- 
der, he  must  endeavor  to  like  red  and  yellow  too. 

In  noticing  and  following  out  the  characteristics  of 
dress  or  style,  as  popularly  in  vogue  in  the  community, 
care  must  be  taken  not  to  servilely  copy  styles  or  pat- 
terns of  goods  actually  worn,  which  would  often  be  only 
the  duplication  of  some  rival  merchant's  goods,  that  have 
already  lost  their  novelty. 

The  quality  of 'goods  worn  must  also  be  considered,  as 
well  as  the  style.  It  would  be  a  great  mistake  to  pur- 
chase an  assortment  of  goods  of  inferior  quality,  when 
the  customers  are  mainly  people  of  wealth,  and  accus- 
tomed to  the  use  of  goods  of  finer  quality ;  and  equally 
as  great  an  error  in  supplying  a  neighborhood  with  goods 
finer  than  thev  are  accustomed  to  use,  or  can  aflbrd  to 
purchase. 

The  quantity  of  goods  to  be  purchased  at  the  com- 
mencement of  a  business  should  depend  mainly  on  three 
things :  the  amount  of  capital,  the  probable  amount  of 
sales,  and  the  convenience  for  replenishing  readily  during 
the  season,  such  portions  of  the  stock  as  may  be  sold  out. 

As  to  the  first — the  amount  of  capital — it  is  supposed 
that  before  even  the  location  was  selected,  this  was  ex- 
actly fixed  and  known ;  and  is,  therefore,  at  this  period, 
not  in  any  uncertainty.  The  second — the  probable  sales 
— it  may  also  be  presumed,  has  received  attention,  and 
been  fully  considered  in  deciding  upon  the  location.  Yet, 
as  it  is  now  absolutely  necessary  that  it  should  be  closely 
estimated,  if  not  before?  done,  a  few^words  on  that  sub- 
ject  will  be  in  place. 


Quantity  of  Goods  refute Ired, 


53 


An  estimate  of  probable  sales  may  be  founded  on  the 
experience  of  other  dealers  in  similar  positions,  or  as  near 
similar  as  may  be  found.  If  the  kind  of  business  pro- 
posed, or  the  location  and  neighborhood  are  so  peculiar 
that  no  such  experiences  can  be  found,  then  the  estimate 
may  be  made  by  an  independent  calculation  of  the  wants 
of  the  community  in  the  aggregate,  by  first  estimating 
the  wants  of  separate  individuals  or  families.  Taking  a 
sufticient  number  of  them  to  form  somewhat  of  a  fair 
average,  and  multiplying  this  average  by  the  whole  num- 
ber of  individuals  or  families  in  the  vicinity  of  the  busi- 
ness. By  such  means  an  estimate  may  be  formed  of  the 
quantity  of  goods  yearly  required  in  the  particular  line, 
to  supply  such  a  community.  Following  this  will  be  the 
consideration  of  the  present  source  of  supply.  If  it  is 
distant  and  inconvenient,  either  in  whole  or  in  part,  it 
would  be  reasonable  to  expect  that  if  a  new  concern 
started  in  the  locality  could  furnish  the  supply,  in  all  re- 
spects as  satisfactorily  in  price  and  variety,  that  the  ad- 
vantage of  convenience  would  so  far  govern  as  to  induce 
the  community  to  obtain  the  supply  at  home,  instead  ot 
going  abroad  for  it.  When  part  of  the  supply  is  fur- 
nished by  dealers  already  in  the  locality,  it  will  be  neces- 
sary to  consider  the  chance  which  the  new  enterprise  has 
of  drawing  a  certain  portion  of  trade  from  those  who 
have  been  longer  established.  By  a  comparison  of  his 
advantages  as  compared  with  others,  in  buying  for  cash, 
in  economical  expenses,  or  in  other  ways,  the  beginner 
can  make  probable  his  ability  to  take  so  much  of  bis  sales 
from  one  dealer  in  the  \dcinity,  and  so  much  from  dealers 
at  a  distance ;  together  making  up  a  round  amount,  which 
he  may  confidently  hope  to  sell  yearly. 

Though  such  calculations  may  seem  at  first  glance  im- 
practicable, they  are  not  so  difficult  nor  unreliable   as 


54 


^Process  of  ^Jstimatlng  this. 


many  might  suppose.  The  originators  of  every  projected 
raih'oad,  canal  or  other  like  enterprise,  base  their  claims 
upon  capitalists  for  money  to  construct  them,  upon  calcu- 
lations framed  upon  such  foundations.  As  an  illustration, 
suppose  that  in  a  community  of  10,000  persons,  centered 
around  a  small  town,  it  should  be  found  by  an  inquiry 
among  various  classes  and  grades  of  the  people,  that  the 
average  yearly  consumption  of  such  goods  as  a  person 
proposed  to  deal  in,  was  ten  dollars  for  every  man,  woman 
and  child.  This  would  require  a  supply  of  $100,000 
worth  for  the  community  per  annum.  Now,  suppose 
there  are  five  stores  in  the  place,  dealing  in  this  kind  of 
goods,  whose  aggregate  sales  are  $80,000  a  year,  leaving 
$20,000  to  be  purchased  from  some  distant  city.  An 
additional  dealer  with  a  new  stock  of  goods,  all  other 
things  being  only  equal,  might  expect  to  do  a  share  of 
the  home  trade,  in  proportion  to  the  assortment  he  keeps, 
equal  with  the  established  houses.  And  by  his  addi- 
tion to  the  combined  assortment  of  the  town,  tend  to  re- 
tain at  home  a  part  also  of  the  $20,000  which  had  been 
laid  out  in  the  distant  city.  Thus,  if  he  should  keep  a 
stock  of  goods  of  the  value  of  $5,000 — and  that  is  as 
large  a  stock  as  any  one  has  who  sells  $20,000  yearly — 
he  might  reasonably  expect  to  sell  as  much,  less  the  i^ro- 
portion  of  the  decrease  in  sales,  which  all  would  have  to 
submit  to,  by  the  introduction  of  a  new  concern  taking  a 
share  in  the  whole  business  of  the  place.  Prudence  would, 
of  course,  dictate  some  reduction  from  this  exact  sum  for 
contingencies,  and  for  the  increased  attention  the  old 
dealers  would  be  likely  to  give  when  they  seriously  feel 
the  influence  of  the  new  enterprise,  in  curtailing  the 
amount  of  their  sales. 

In  all  calculations  of  the  foregoing  kinds,  much  will 
depend  on  the  popularity  of  the  House  already  in  the 


Co9ireniertce  for  'Kcpte7tis?ihig, 


55 


trade.  Unless  there  are  some  good  indications  that  a 
lair  opening  for  a  new  enterprise  exists,  owing  to  increase 
of  population,  or  to  the  unpopularity  of  so.ue  one  or  more 
of  the  principal  houses  in  the  trade,  the  locality  could  not 
have  been  well  selected ;  and  hence,  as  before  remarked, 
this  subject  oi  the  amount  of  goods  which  can  be  sold 
per  annum,  in  a  certain  line  of  business,  should  be  set- 
tled before  positively  deciding  on  the  location. 

The  third  and  last  consideration  in  laying  in  stock— 
the  convenience  for  replenishing  in  articles  which  may  be 
from  time  to  time  sold  out,  must  mainly  be  governed  by 
the  distance  from  the  entrepot  where  the  purchases  are 
made.  If  it  is  very  near,  it  may  be  advantageous  to 
visit  it  every  week  to  replenish,  or  even  to  see  the  range  of 
prices,  or  the  probability  of  a  fall  or  rise  on  certain  articles, 
so  that  the  price  of  those  on  hand  may  be  modified  to 
meet  the  market.  When  the  distance  is  greater,  it  may 
not  be  profitable  to  go  oftener  than  once  a  month  for  that 
purpose,  and  when  still  more  distant,  twice  or  thrice  in  a 
season.  But  the  distance  may  be  so  great  that  it  is  ad- 
vantageous to  purchase  all  that  is  likely  to  be  needed  for 
the  coming  six  months ;  though  in  these  times  of  rail- 
roads, telegraphs  and  frequent  mails,  such  locations  are 

rare 

A  good  general  rule  to  adopt  in  such  cases,  would  be 
to  arrange  the  primary  purchases  at  the  commencement 
of  business,  and  afterward  at  the  beginning  of  each  sea- 
son, so  that  there  will  be  no  necessity  for  going  to  pur^ 
chase  again,  until  so  many  goods  are  required  that  the  ex- 
penses attending  the  purchase  will  not,  at  the  outside, 
exceed  two  per  cent  on  the  amount  bought.  If  the  rate 
could  be  reduced  to  one  per  cent  it  may  be  still  better. 
If  goods  are  purchased  in  March,  that  will  not  be  needed 


56 


Purchasing  Choice  Goods, 


till  ^lay,  the  loss  of  interest  may  be  greater  than  the  ex- 
pense of  a  second  trip ;  besides  the  risk  of  deteriora- 
tion in  price  and  damage,  and  additional  expenses  in- 
curred  by  having  the  goods  in  possession  long  before  they 
are  wanted.  Some  reliance  may  be  placed  on  ordering 
limited  amounts,  particularly  of  staple  and  regular  kinds 
of  goods,  concerning  which  something  will  be  found  fur- 
ther on  in  this  work,  in  a  chapter  about  replenishing  stock, 
to  which  the  reader  is  referred  for  details  that  may  be 
important  to  consider  in  this  connection. 

The  purchase  of  very  choice  styles  of  goods,  or  goods 
in  limited  supply,  should  be  governed  by  other  considera- 
tions. It  is  sometimes  necessary  to  secure  these  early  in 
the  season,  as  later  they  may  not  be  found,  and  the  re- 
tailer who  has  secured  a  full  supply  of  them  will  have  an 
advantage  over  one  who  can  not  get  them,  or  can  only 
obtain  them  at  advanced  prices. 

However,  as  it  requires  a  master  at  the  business,  to  tell 
what  goods  should  rank  as  choice,  and  what  are  likely  to 
be  in  limited  supply,  and  as  it  is  the  interest  of  the  whole- 
sale dealer  to  have  his  customers  believe  that  everything 
he  has  for  sale  has  one  or  both  of  these  advantageous 
qualities,  it  is  the  safest  course  for  beginners  to  keep 
closely  to  the  above  rule ;  deviating  only  when  the  judg- 
ment is  well  satisfied  that  it  will  be  profitable  to  do  so. 
The  large  purchases  partake  somewhat  more  of  a  specu- 
lative character,  and  therefore  the  lighter  purchases,  with 
frequent  replenishing,  are  to  be  commended  as  more  pru- 
dent. 

To  enable  the  retailer  to  avail  himself  practically  of 
his  conclusions  in  relation  to  his  purchases,  as  proposed  in 
tlie  foregoing,  it  will  be  necessary  for  him  to  make  up  a 
list  or  inventory  of  the  articles  he  intends  purchasing. 


Making  Out  Zist. 


57 


before  commencing  to  buy ;  putting  dow  as  definitely  as  i 
he  can  the  quantity  and  value  or  price  of  each  article. 
As  the  making  of  this  up  is  a  work  of  some  labor,  when 
done  properly,  (and  it  is  of  not  much  use  unless  so  done,) 
a  little  space  will  be  devoted  to  the  specific  details  of  such  ^ 
a  list,  taking  for  the  illustration  a  stock  of  dry  goods,  to 
amount  to  $10,000. 

The  first  subject  to  consider  will  be  the  various  depart- 
ments, or  sub-divisions  of  goods,  which  come  under  the 
general  name  of  "  dry  goods."  The  beginner  should  take 
a  sheet  of  paper  and  write  down  each  subdivision,  one 
under  the  ©ther,  as  follows : 


$0,000 
0,000 
0,000 
0,000 
0,000 
0,000 
0,000 
0,000 
0,000 
0,000 
O.QOO 


Men's  wear,        .  -  -  -  - 

Ladies'  dress  goods,  .  -  -  • 

Brown  muslins,  .  -  -  - 

Bleached  muslins,  -  -  -  -  • 

Hosiery,  -  -  -  -  - 

Gloves,        ------ 

Flannels,  .  -  -  -  - 

Tickings,  -  .  -  -  -  - 

Linen  goods,     -  -  -  -  - 

Silks,  -  -  -  -  -  ■ 

Ribbons,  -  '  - 

Etc.  $00,000 

In  this  way,  running  out  a  list  of  every  class,  he  can 
think  of  which  is  appropriate  to  the  business,  or  which 
it  would  be  profitable  to  keep  for  sale.  When  this  is 
completed,  or  all  on  it  that  can,  for  the  time,  be  thought 
of,  then  he  may  take  up  one  of  these  sub-divisions  as  a 
heading  for  another  sheet  of  paper,  and  under  it  put 
down  every  thing  which  is  thought  necessary  to  have,  to 
make  the  assortment  complete,  with  quantity  and  price ; 
carefully  considering  so  as  to  get  only  such  articles  as  are 
desired ;  and  then  count  out  the  amounts  into  the  outer 


68 


Special  Details  JVecessary, 


column,  or  edge  of  the  sheet  of  paper,  and  sum  up  the 
whole,  so  that  he  can. see  what  the  estimate  is  for  that 
department.  Suppose,  as  an  example,  the  first  sub-divi- 
sion is  taken,  viz ; 

"  GOODS   FOE   men's   WEAE." 


1  piece  black  cloth, 

16 

yds. 

,  at  $3.00 

S48.00 

1     " 

u          u 

16 

(( 

(( 

4.50 

72.00 

1    '' 

brown  " 

16 

u 

li 

4.00 

04.00 

1     " 

blue       " 

16 

u 

li 

2.50 

40.00 

1    " 

bl'k  beaver  do. 

20 

u 

u 

4.00 

80.00 

1    " 

''  cot. 

warp  20 

u 

u 

2.25 

45.00 

1     " 

1 

black  cassimere, 

25 

u 

(. 

1.25 

31.25 

1     " 

it                   u 

20 

u 

a 

2.00 

40.00 

1     '^ 

blue           « 

20 

il 

it 

1.50 

30.00 

1    " 

steel  mixed  do., 

25 

u 

u 

1.25 

31.25 

1                         1     " 

a          u          u 

25 

(( 

(( 

1.50 

37.50 

1     " 

i 

"        "       satinet 

,          30 

(( 

u 

75 

22.50 

'                               I     u 

black  satinet, 

30 

(( 

u 

1.00 

30.00 

3    " 

fancy  cassimere, 

75 

u 

u 

1.00 

75.00 

2     " 

u               u 

50 

u 

u 

1.50 

75.00 

Etc. — thus  going  on    through   all    the  variety   which 
may  be  thought  necessary  to  make  up   an   assortment 
which  we  may  suppose  will  foot  up  to  the  amount  of 
$1,600.     Then  taking  another  sheet,  with  another  of  the 
headings  and  continuing  on,  the  same  way  through  all 
the  sub-divisions,  summing  each  one  up  separately.  When 
this   is  all   done,   the    footings    or    amounts    are  to  be 
set  opposite  to  each  heading  on  the  first  sheet  started 
with,  and  all  added  up,  which  wull  show  what  the  whole 
estimate  amounts  to.     It  is,  perhaps,  necessary  to  remark 
here  that  the  novice  is  to  give  a  careful  consideration  to 
every  article  he  puts  on  the  list.     If  he  knows  that  blue 
cloth  is  only  bought  by  a  certain  class  who  do  not  desire 
a  fine  article,  he  will  mark  it  at  such  price  as  he  thinks 
will  suit  best,  and  not  merely  mark  at  random  as  the  illus- 


Cutting  Down  the  Estimate, 


59 


tration  is  marked.    If  he  has  noticed  that  nobody  wears 
blue  cloth  in  the  locality,  of  course  he  does  not  want  to 
put  it  down.     And  so  of  every  separate  item  under  each 
head.    Each  is  to  be  separately  considered,  and  the  rela- 
tive merits  of  different  values  duly  estimated,  and  whether 
one  quality  alone  will  suffice,  or  whether  two,  or  three,  or 
more,  difierent  qualities  are  necessary  for  the  assortment. 
When  this  is  all  made  up,  he  has  before  him  a  list  of 
about  such  goods   as  he  would  buy  if  he  should  go  to 
make  his  purchases  without  a  definite  idea  of  what  he 
wants.    But  if  he  now  counts  up  the  totals  of  each  class, 
he  will  probably  find  that  instead  of  $10,000,  (the  pro- 
posed  limit,)  they  amount  to  $12,000,  or  perhaps  $15,000 
— as  his  purchases  would  if  made  without  the  list.    Should 
the  list  not  be  capable  of  reduction,  to  the  limit  of  $10,000, 
by  striking  out  individual  articles  from  under  each  sepa- 
rate head,  without  seriously  impairing  assortments,  it  will 
be  necessary  to  consider  the  propriety  of  dispensing  en- 
tirely with  one  or  more  of  the  sub-divisions  or  classes  of 
goods.    It  is  generally  preferable  that  there  should  be  a 
fair  assortment  in  each  such  sub-division  of  goods  which 
may  be   kept,   rather  than  a  greater  variety  of  classes 
with  a  poor  assortment  in  many  of  them.    In  the  case 
illustrated,  therefore,  it  might  be  desirable  to  strike  out 
the  department  of  "  silk  goods,"  or  "  ribbons,"— or  per- 
haps  "  men's  wear,"  which  now  often  forms  an  entirely 
difi*erent  branch  of  business.     When  the  whole  list  is  per- 
fected by  thus  going  over  it,  and  brought  within  the  pro- 
posed limit  as  to  amount,  for  convenience  it   should  be 
copied  into  a  pocket  memorandum  book,  using  only  the 
left  side  pages,  reserving  the  right  side  blank  for  the  inser- 
tion, at  the  time  of  purchasing,  of  the  exact  quantities  and 
prices  of  the  goods  purchased ;  and  when  the  goods  bought 
are  not  just  such  as  are  on  the  list,  which  will  often  be  the 


60 


^an  when  details  are  Impossible^ 


case,  to  note  what  is  purchased  in  lieu  of  them.  The  ini- 
tials of  the  wholesale  dealer  should  also  be  added  on  the 
line,  if  there  is  any  probability  of  forgetting  from  whom 
the  purchase  is  made.  Such  memorandums  are  valuable  for 
correcting  errors  in  quantities  or  prices,  which  may  be 
made  in  entering  the  goods  by  the  salesman,  and  atten- 
tion to  them  will  prevent  the  retailer  from  duplicating  his 
purchase  in  another  house,  which  he  may  sometimes  do  if 
he  has  no  note  of  the  previous  purchase. 

It  will  often  happen  that  it  is  impossible  to  put  down 
with  accuracy  the  details  of  the  articles  to  be  purchased 
before  seeing  them.  In  such  cases,  it  may  be  sufficient  to 
put  down  simply  the  amount  intended  to  be  invested  in 
the  class  of  goods.  But  in  the  most  difficult  cases  much 
may  be  done  to  aid  the  purchaser  in  the  excitement  of 
buying.  Take,  for  instance,  in  a  dry  goods  business, 
such  a  class  of  goods  as  "  dress  trimmings,"  than  which 
nothing  in  the  whole  range  of  merchandise  is  more  vari- 
able. The  continually  recurring,  yet  unexpected  and  ir- 
regular changes  in  the  styles  and  colors,  make  it  almost 
impossible  for  even  the  most  astute  retailer  to  decide  upon 
what  he  will  buy,  until  he  sees  the  styles.  One  sea- 
son "  gimps  "  are  all  the  "  rage,"  the  next  "  fringes,"  then 
"buttons,"  then  "braids,"  then  *•  velvets,"  then  "rib- 
bons," and  so  on,  each  kind  in  dozens  of  diversified 
styles,  the  only  and  great  aim  of  those  who  get  them  up 
being  to  get  something  new,  so  that  the  variety  might  well 
confound  the  calculations  of  the  experienced.  Still,  even 
in  this  chaos  of  finery,  much  can  be  accomplished  in  pre- 
paring the  way  towards  a  proper  selection.  Suppose  in 
such  a  case  it  should  be  decided  to  invest  $300  in  a  small 
assortment  of  flishionable  dress  trimmings,  the  particular 
kinds  to  be  decided  on  after  inspection.  It  will  be  a  ma- 
terial help  to  the  judgment  to  divide  the  amount,  and  say 


Advantages  of  a  Memorandum^ 


61 


how  much  shall  be  invested  in  qualities  suited  for  lawns 
and  printed  dress  goods  of  like  character ;  how  much  for 
a  better  grade  suited  to  worsted  or  woolen  dress  go#ds ; 
and  how  much  to  a  finer  grade  for  silk  goods.  And  if 
experience  has  shown  that  it  is  difficult  to  sell  dress  trim- 
mings, when  the  whole  quantity  required  for  a  dress  ex- 
ceeds in  value  one-fourth  the  cost  of  the  dress,  a  still 
closer  classification  can  be  made,  and  the  completed  list 
will  give  perhaps  $50  worth,  ranging  at  from  twenty- 
five  to  fifty  cents  to  the  dress,  $100  worth  from  fifty 
cents  to  a  dollar  for  the  dress,  and  $150  worth  from 
11.00  to  $3.00  for  the  dress.  Such  memorandums  while 
they  confine  the  range  to  narrow  limits,  still  give  scope 
for  the  selection  of  any  style  or  kind  of  goods  which  may 
be  thought  most  suitable  after  inspection.  In  fact,  the 
list  of  more  regular  goods  will  sometimes  not  be  more 
definite,  and  will  often  read  thus : 

3  pieces  cotton  pant,  stuflfs,  to  sell  from  37^  to  75  cents, 
leaving  the  exact  styles  and  prices  to  be  decided  on  after 
an  inspection  of  the  goods. 

A  week  might  be  well  spent  by  a  person  beginning,  in 
properly  making  up  such  a  "  memorandum  book."  Care 
in  such  particulars  indicates  prudence  and  forethought, 
and  if  a  retailer  finds  himself  deficient  in  either  of  these, 
a  habit  of  relying  on  such  memorandums  in  purchasing 
will  make  it  necessary  that  he  does  reflect  and  think,  be- 
fore going  to  make  his  purchases. 

The  experienced  merchant  finds  the  advantage  of  such 
a  guide  in  buying  a  diversified  stock  of  goods,  and  the 
beginner  never  need  fear  that  he  will  know  too  much 
about  the  goods  he  intends  buying,  before  he  commences 
to  purchase.  As  the  more  exactly  he  knows  what  he 
wants,  the  less  is  he  likely  to  be  improperly  influenced 
by  the  wholesale  salesman.    Besides,  this  preparation  is 


62 


The  *^  Guessinff"  Method, 


something  of  a  relief  to  his  mind,  wliich  is  likely  to  have 
enough  to  fully  occupy  it,  in  obtaining  credit,  comparing 
prices  of  rival  houses,  selecting,  shipping,  and  settling  for 
his  purchases. 

But  such  memorandums  should  not  be  guesses  or  jump- 
ling  at  conclusions  in  the  lump,  as  they  are  then  worse  than 
useless,  giving  a  man  the  idea  that  he  must  buy  some- 
thing, he  knows  not  what ;  whereas  if  he  trusts  entirely 
to  his  memory  he  might  recollect  something  of  what  he 
wants. 

As  an  illusti-ation  of  this  guessing  process,  quite  preva- 
lent with  some  who  are  too  lazy  to  look  particularly  into 
details,  the  writer  once  saw  on  the  memorandum  book  of 
a  retailer  who  was  buying  to  replenish  stock,  the  fol- 
lowing : — "  A  small  assortment  of  narrow  ribbons."  The 
retailer  said  he  had  a  good  many  at  home,  but  he  would 
select  out  a  few  more,  which  he  did,  simply  guessing  at 
the  widths  and  colors  he  needed,  when  he  could  have  had 
in  ten  minutes  time  before  he  started,  a  full  list  of  the  ex* 
act  colors  and  widths  he  was  out  of,  thus  surely  avoiding 
the  duplication  of  goods  which  would  likely  take  place 
by  the  guessing  method. 

For  want  of  care  in  making  up  such  a  list,  many  a  re- 
tail dealer  has  his  shelves  cumbered  up  with  unsaleable 
duplicates  of  goods,  which  employ  a  large  part  of  his 
cash  capital,  and  for  any  practical  advantage  to  his  busi- 
ness in  increasing  sales  might  as  well  be  packed  away  in 
cases.  All  that  sells  of  them  from  season  to  season 
scarcely  pays  for  the  depreciation  alone,  without  consid- 
ering the  trouble  of  keeping  them  in  order,  and  their  of- 
ten being  a  hindrance  to  the  purchase  of  other  goods 
which  would  sell.  A  dealer  that  the  author  knew  had 
some  experiences  of  this  kind  in  one  department  of  his 
business — that  of  "  kid  gloves."    Without  special  regard 


Danger  of  guying  at  "Random, 


63 


to  his  customers'  wants  he  had  made  several  purchases  of 
"job  lots,"  from  time  to  time,  among  which  were  many 
sizes  and  colors  not  often  called  for.     These  increased  the 
bulk  and  appearance  of  the  stock,  much  beyond  what  it 
had  ordinarily  been.    Notwithstanding  the  increased  stock, 
complaints  were  soon  made  by  the  salesmen  that  they 
could  not  suit  the  customers  out  of  the  stock  on  hand, 
and  more  gloves  were  wanted.  This  being  a  very  common 
excuse  for  failure  to  effect  sales,  but  little  attention  was 
given  to  it.     There  seemed  to  be  enough  gloves,  and  they 
were  offered  cheap  enough.     But  the  glove  business  grad- 
ually declined,  and  the  stock  did  not  sell  off.    Finally, 
when  the  busy  season  had  nearly  passed  by,  it  became 
patent  to  the  proprietor  that  something  was  wrong  with 
the  "  kid  gloves."     He  had  the  whole  stock  carefully  as- 
sorted out,  when  it  was  found  to  be  mainly  made  up  of 
the  odds  and  ends  of  the  "job  lots."     Sizes  too  large  or 
too  small  for  the  general  trade,  and  colors  and  qualities 
not   desired   even   when  the   sizes   were    suitable,  with 
scarcely  a  pair  of  gloves  in  the  lot  of  such  as  were  daily 
called  for.    The  remedy  adopted  was  to  send  a  large  part 
of  them  to  the  auction  room  to  sell  for  what  they  would 
bring,  and  get  in  a  fresh  supply  of  the  right  sizes  and 
colore,  after  which  gloves  were  sold  to  the  customers  as 
before,  without  complaint. 

There  are  not  many  retailers  who  have  been  four  or 
five  years  in  business,  but  will  find  such  unsaleable  lots  of 
goods  on  their  shelves,  which  they  would  be  benefitted  by 
selling  off  at  auction  for  whatever  they  will  bring,  and 
supplying  their  place  with  something  desirable.  A  man 
may  find  it  to  his  interest  to  keep  a  piece  of  land  year 
after  year,  though  it  brings  him  in  no  income.  He  is  of- 
ten not  disappointed  in  his  expectations,  and  after  keep- 
ing it  five  or  ten  years,  it  sells  for  so  large  an  advance 


64 


I^eelinff  the  way  along , 


over  cost  as  to  make  it'  a  good  investment.  But  such  ad- 
vances in  price  cannot  even  be  hoped  for  in  merchandise, 
hence  the  sooner  unsaleable  goods  are  disposed  of  the 
better. 

Young  merchants  sometimes  meet  with  considerable 
losses,  which  have  their  origin  in  an  attempt  to  keep  a 
greater  variety  of  sub-divisions  of  goods  than  their  capital 
will  warrant.    They  get  a  little  in  every  department,  but 
hardly  enough  for  an  assortment  in  any  one ;  intending  to 
learn  by  the  experience  of  the  business  what  particular 
classes  of  goods  -are  most  profitable,  or  rather,  perhaps, 
what  kinds  they  have  most  demand  for.     Starting  with- 
out any  well  devised  plan,  they  "  feel  their  way  along." 
When  a  man  cannot  see  his  way,  of  course  feeling  his  way 
is  necessary  and  prudent.     The  danger  of  this  plan  how- 
ever, is,  that  a  great  many  "  odds  and  ends  "  of  broken 
assortments  are  left  on  hand,  which  it  is  very  difficult  to 
sell,  except  at  a  loss.    Take  for  illustration  the  case  of  a  be- 
ginner whose  memorandum  book  is  made  up  a  few  pao-es 
back.     If,  when  the  rough  calculation  indicated  there  is 
completed,  and  it  is  found  that  it  will  require  $15,000 
of  stock  to  give  a  full  assortment  in  each  department,  he 
should  be  in  doubt  which  department  or  sub-division  to 
strike  out  of  the  list,  and  so  conclude  to  first  try  all  of 
them  with  a  limited  assortment,  or  rather  some  of  them 
with  no  assortment,  cutting  down  the  department  of  "men's 
wear  "  to  $600  worth,  and  several  others  in  the  same  pro- 
portion.     The  result  would  be  that  these  departments, 
having  no  assortment  to  show,  are  soon  lost  sight    of 
in  the  activity  of  the  other  branches  in  which   the  as- 
sortment is  good.    And  thus,  perhaps,  one-quarter  of  the 
capital  will  be  practically  lost  to  the  business :  the  goods 
remaining    month    after    month    on    the   shelves,  until 
they  become  faded  or  out  of  fashion ;  and  even  when 


Zoss  in  Selling  off  Sroken  Assortments. 


65 


sold  will  not  bring  more  than  three-fourths  of  what  they 

cost. 

Every  experienced  retailer  knows  how  difficult  it  is 
to  close  out  all  the  stock  in  any  one  department  which 
he  desires  to  cease  dealing  in.    It  is  always  done  with 
considerable  loss  after  the   assortment  is  once  broken. 
Hence,  if  a  memorandum  list,  carefully  made  out  as  sug- 
gested, only  prevents  losses  of  this  character,  it  will  am- 
ply repay  for  a  month's  labor,  if  necessary,  to  make  it  out* 
But  its  advantages  are  not  limited  to  this.     In  fact,  no 
prudent  merchant  would  think  of  purchasing  a  stock  of 
goods  without  such  a  guide.    A  junior  partner  in  a  west- 
ern house,  who  had  been  considered  so  prudent  as  to  have 
had  charge  for  some  time  of  a  branch  concern,  came  east 
some  years  ago  to  make  purchases  for  the  first  time,  with- 
out any  definite  idea  of  the  quantity  of  goods  he  was  to 
purchase  in  each  department  of  business,  but  was  limited 
in  the  aggregate  to  the  amount  of  $8,000.    When  he  got 
home  and  summed  up  his  invoices,  he  had  actually  bought 
over  $20,000  worth.     So  great  a  mistake  could  only  occur 
from  an  entire  dependence  on  the  estimates  of  the  hour, 
and  the  want  of  a  well  digested  and  pre-arranged  list^  of 
quantities.    The  influences  and  excitements  of  a  first  visit 
to  the  great  metropolis  overcame  his  cool  judgment. 

Nothing  is  so  distasteful  to  a  salesman  in  a  wholesale 
house  as  to  see  his  customer  with  memorandum  book 
in  hand,  asking  by  the  card  for  this,  that,  and  the  other. 
The  young  merchant  is  frequently  ridiculed  for  "old  fogy- 
ism"  in  tying  himself  down  to  it,  and  urged  to  "go  in" 
and  buy  anything  that  is  "  cheap."  But  these  very  ob- 
jections are  evidences  of  its  value.  The  salesman  knows 
that  while  his  customer  adheres  to  it,  there  is  but  little 
chance  of  influencing  him  to  buy  beyond  his  wants. 
Before  the  beginner  leaves  home  to  make  his  purchases. 


66 


Amount  of  Credit  Required* 


it  will  be  prudent  to  make  some  calculations  as  to  the 
amount  of  goods  which  it  will  be  necessary  to  buy  on 
credit,  if  any.  This  subject  can  be  had  in  view  when 
making  up  the  memorandum  book.  Certain  goods  are 
mostly  sold  for  cash ;  others  are  purchased  more  advan- 
tageously for  cash,  even  when  they  are  also  sold  on  credit. 
Other  kinds  may  be  wanted  in  such  small  quantities  that 
it  would  be  injudicious  to  ask  credit  on  them  by  a  person 
just  commencing  business,  as  the  necessity  for  credit  on 
Buch  trifling  amounts  would  indicate  an  insufficient  capi- 
tal for  the  business,  and  might  give  rise  to  suspicions  that 
he  does  not  tell  the  truth  about  the  amount  of  cash  capi- 
tal he  possesses.  The  credit  needed  should  therefore  be 
obtained  on  other  than  the  foregoing  articles,  and  gener- 
ally, it  may  be  remarked,  only  on  goods  in  which  the  dif- 
ference between  the  cash  and  credit  price  is  not  greater 
than  one  per  cent  a  month  for  the  time  of  credit. 

The  relative  proportions  of  his  cash  and  credit  pur- 
chases having  been  settled  on,  in  accordance  with  the  re- 
commendations in  the  first  chapter  of  this  book,  it  will 
now  be  necessary  only  to  carry  out  the  detail  by  propor- 
tioning the  amounts  of  cash  and  credit  to  each  separate 
sub-division  of  the  stock.  These  proportions  may  be 
noted  in  the  memorandum  book  at  each  heading.  As  the 
cash  is  a  specific  item,  while  the  amount  of  the  credit  is 
an  undetermined  one,  it  is  necessary  to  take  the  cash  first 
into  calculation. 

To  make  this  subject  more  plain,  the  illustration  as  be- 
fore used,  of  a  ten  thousand  dollar  stock  will  be  continued. 
The  capital  in  cash  we  will  take  to  be  $5,000,  out  of 
which  must  be  reserved  sufficient  to  pay  freight  and  ex- 
penses of  purchasing,  etc.,  say  in  this  instance  $300,  or 
better,  perhaps,  $500,  so  as  to  pay  any  bill  of  trifling 
amount  which  may  have  been  omitted  from  the  calculations 


What  must  be  Taid  for  in  Cash. 


67 


in  the  memorandum  book.  This  will  leave  $4,500  toward 
paying  for  purchases.  In  going  over  the  memorandum 
book,  it  is  found  that  $700  will  be  required  to  pay  for  small 
purchases  and  "  cash  "  goods,  leaving  $3,800  to  apply  on 
the  purchase  of  the  balance  of  the  stock  of  goods— $9,300. 
This  would  enable  the  purchaser  to  pay  forty  per  cent  of 
his  purchases  in  cash.  The  balance — sixty  per  cent — he 
will  require  on  credit.  To  be  on  the  safe  side  he  should 
endeavor  to  make  the  arrangement  with  the  wholesale 
dealer  to  pay  one-third  cash,  as  he  may  occasionally  be 
under  the  necessity  of  paying  as  much  as  one-half  cash 
on  some  purchases.  Besides,  it  is  always  pleasanter,  and 
adds  to  a  retailer's  credit,  to  be  able  when  settling  up  for 
his  purchases,  to  pay  a  larger  proportion  in  cash  than  was 
agreed  upon,  while  the  opposite  condition,  where  he  comes 
short  of  his  promises,  and  having  agreed  to  pay  one-half 
cash,  has  to  ask  that  he  be  let  off  with  one-third  or  three 
eio-hths  cash,  even  though  granted,  as  it  often  is  because 
the  goods  are  entered  and  packed,  causes  a  loss  of  confi- 
dence in  the  retailer's  ability  to  manage  his  business  prop- 
erly. 

One  advantage  which  this  pre-arrangement  gives  the 

buyer,  is  the  ability  to  tell,  when  he  asks  for  credit,  ex- 
actly what  proportion  of  the  purchase  he  can  pay  in  cash. 
Which  proportion  for  his  benefit  should  always  be  set- 
tled on  before  he  has  made  any  selections  of  goods.  If 
he  goes  on  to  select  his  goods,  leaving  the  seller  in  un- 
certainty as  to  whether  he  intends  to  ask  for  credit  on  the 
whole,  or  to  pay  cash  for  part,  the  most  unfavorable  view 
is  taken,  and  it  is  supposed  that  he  will  want  credit  for  all 
of  them.  Now,  as  the  payment  of  part  cash  on  a  purchase 
is  always  advantageous  to  the  seller,  or  regarded  so,  the 
buyer  should  obtain  the  advantage  of  his  cash  payment, 
by  having  the  terms  of  the  credit  and  the  proportion  to 


68 


Zength  of  Credit  necessary • 


t 


be  paid  in  cash  settled  on  primarily.  The  wholesale  deal- 
er will  then  be  disposed  to  accord  to  him  such  favor  as 
he  deserves,  on  account  of  the  cash  payment,  in  making 
prices   to  meet  his  views  whenever  possible. 

The  length  of  credit  which  the  retailer  will  require  on 
his  credit  pm-chases,  is  also  of  importance,  and  should  be 
duly  considered  in  this  connection,  and  the  conclusions 
which  may  be  arrived  at  entered  in  the  memorandum 
book,  with  the  amount.  This  length  of  credit,  or  time 
as  it  is  usually  called,  must  be  sufficient  to  enable  the 
buyer  to  get  his  goods  home,  sell  them,  and  if  credited 
out,  to  make  the  collection  before  his  own  payments  be- 
come due.  It  will  doubtless  save  present  reflection  and 
labor  for  the  retailer  to  jump  at  a  conclusion,  and  assume 
that  he  will  sell  €inough  to  pay  his  bills  as  they  mature; 
especially  if  he  buys  his  goods  on  the  longest  time  he  can 
get.  But  it  will  be  more  prudent  for  him  carefully  to  in- 
vestigate his  chances  of  selling  for  cash,  and  collecting 
the  cash  from  previous  credit  sales  for  each  month  of  the 
year.  Such  calculations  will  be  but  the  details  of  the 
yearly  sales,  referred  to  in  the  beginning  of  this  chapter, 
and  may  be  used  to  confirm  or  disprove  the  conclusions 
there  arrived  at.  These  are  the  data  from  which  he  is  to 
decide  as  to  the  length  of  credit  he  will  need  on  his  pur- 
chases. 

It  may  seem  to  some  readers  as  no  great  matter  if  the 
dealer  gets  the  longest  credit  he  can,  and  yet  falls  short 
at  the  time  of  payment ;  how  can  it  help  him  to  know  that 
he  will  be  short  when  he  buys  the  goods  ?  But  setting 
aside  the  impropriety  of  a  man  purchasing  goods  on  a 
specific  time,  when  he  has  made  no  calculation  as  to 
whether  he  will  be  able  to  pay,  in  which  case  if  he  fails 
his  innocence  is  only  ignorance,  at  best,  and  ought  not  to 


Long  Credits   ZTnpro/l tabled 


69 


exculpate  him  for  a  broken  promise,' it  is  not  profitable' 
for  a  man  to  buy  goods  on  a  longer  credit  than  he  needs. 
Almost  all  houses  that  sell  on  credit,  sell  proportionally 
cheaper  the  shorter  the  credit.  That  is,  if  six  months  be 
the  ordinary  credit,  and  a  buyer  is  content  with  three 
months,  often  one  per  cent  a  month  will  be  deducted  for 
the  three  months  taken  off;  while  if  the  credit  is  given  at 
six  months,  and  at  the  end  of  three  months  the  purchaser 
desires  to  pay,  if  in  good  credit  he  could  probably  only 
get  two  to  two  and  one-fourth  per  cent  off,  or  at  the  rate 
of  seven  to  nine  per  cent  per  annum.  Besides  this  differ- 
ence, there  will  frequently  be  modifications  in  price  to  the 
short  time  buyer.  Hence  it  is  not  profitable  on  the  whole, 
for  a  man  to  purchase  his  goods  on  any  longer  time  than 
he  actually  needs. 

The  process  of  making  up  the  monthly  estimate  of  re- 
ceipts of  cash,  is  somewhat  different  from  that  of  the 
yearly  estimates  before  mentioned.  Each  particular  busi- 
ness has  its  months  of  activity  and  months  of  dullness,  in 
the  former  of  which  the  most  of  the  trade  is  done.  It  is 
expected  that  a  person  embarking  in  a  new  business  will 
know  enough  about  its  character  to  be  able  to  tell,  with 
some  degree  of  certainty  when  these  months  are,  and 
what  proportion  of  the  annual  business  is  done  in  each 
one  of  them. 

When  any  part  of  the  retailer's  sales  are  on  credit,  a 
different  rule  of  estimation  must  be  employed,  as  the  re- 
ceipt of  the  money  is  consequent  on  other  causes  than  ac- 
tivity in  trade.  Goods  bought  at  retail  on  credit,  will 
generally  only  be  paid  for  when  the  buyer  comes  legiti- 
mately into  possession  of  the  money,  from  the  prosecution 
of  his  business  or  calling.  The  consumer  is  not  likely  to 
borrow  money  to  make  such  payments,  as  the  dealer 
sometimes  does  in  an  emergency.    If  the  retailer's  custo- 


70 


Local  ^ay-Days, 


mer  is  a  farmer,  he  will  probably  be  in  funds  to  pay  when 
his  "wheat,"  "wool,"  "cotton,"  "tobacco,"  "fatted 
cattle,"  or  other  product  is  sold.  If  he  is  a  mechanic, 
lawyer,  doctor  or  other  person  living  in  and  depending 
upon  a  community  of  farmers  for  his  business,  he  can 
only  pay  when  he  is  paid.  Hence  it  comes  that  in  every 
community  there  are  one,  two,  three  or  more  specific  pe- 
riods in  the  year,  varying  as  the  communities  vary  in 
their  products,  which  are  known  and  respected  as  "  pay- 
days." In  manufacturing  districts  they  may  be  monthly 
or  semi-monthly.  The  retailer  must  note  these  periods, 
and  make  his  arrangements  for  collections  at  such  periods. 

By  the  observation  of  all  these  circumstances,  an  esti- 
mate can  be  made  of  the  cash  receipts  for  each  month  in 
the  year,  upon  which  is  to  be  based  the  retailer's  credit 
purchases.  Such  estimates  always  need  a  large  margin 
for  contingencies,  especially  those  which  are  founded  on 
the  collections  from  credit  sales.  If  it  can  be  avoided,  it 
will  be  better  not  to  undertake  obligations  exceeding 
three -fourths  of  the  estimated  receipts,  as  it  is  better  to 
have  a  little  money  over  than  to  be  short.  There  are  al- 
most always  opportunities  in  a  business,  in  which  an  en- 
terprising man  can  use  to  advantage  any  surplus  of  cash 
he  may  have  on  hand,  when  he  does  not  think  it  desirable 
for  particular  reasons,  to  discount  his  future  payments. 

The  advantages  of  thus  arranging  the  credits,  so  that 
the  resources  of  the  business  will  meet  the  liabilities  at 
maturity  are  many.  Promptness  in  paying  mainly  de- 
pends on  it.  Without  it,  it  is  not  always  possible  to  use 
all  the  capital  in  the  business  to  advantage.  For  even 
when  the  capital  is  so  large  that  the  dealer  is  in  no  dan- 
ger of  being  unable  to  meet  his  notes  at  maturity,  if  no 
calculations  are  made  of  the  character  mentioned,  there 
will  occur  frequent  periods  when  the  capital  lies  as  cash 


Gain  in  IBuying  on  Short  Time, 


71 


in  bank,  and  can  not  be  used  to  a  profit,  but  must  wait 
perhaps  for  two  or  three  months,  the  maturity  of  bills 
which  might  better  have  been  purchased  on  shorter  time. 
A  friend  of  the  author,  when  just  commencing  business, 
was  advised  by  an  old  and  successful  dealer,  to  always 
keep  himself  short  of  money.  The  advice  is  good  for  all 
men  in  business,  if  followed  in  this  way :  in  buying  on 
just  such  a  length  of  time,  that  it  requires  the  dealer  to 
attend  closely  to  his  sales  and  collections,  so  as  to  get  to- 
gether the  money  necessary  to  meet  his  obligations,  rather 
than  to  buy  on  such  long  time,  that  he  is  certain  to  have 
money  enough  to  meet  his  payments,  and  so  can  be  care- 
less about  selling  off  his  goods  and  collecting  in  his  out- 
standing accounts. 

It  is  the  practice  of  some  very  successful  business  men, 
to  buy  their  goods  on  the  longest  time  they  can  get,  in 
all  cases,  and  rely  on  discounting  whenever  they  have 
money  on  hand  beyond  their  immediate  necessity.  But 
the  practice  can  not  be  commended  to  a  beginner  who 
has  his  credit  to  establish.  Those  who  succeed  on  that 
plan  are  generally  the  old  dealers,  who  are  in  good  cred- 
it. It  may  answer  later  in  business,  when  a  man,  feeling 
that  he  is  fully  responsible  and  able  to  meet  all  his  en- 
gagements at  maturity,  and  his  credit  is  undoubted,  does 
not  wish  any  more  to  take  the  trouble  of  cyphering  out 
exactly  how  much  he  can  pay  from  his  business  this 
month,  and  how  much  the  next,  but  takes  it  easy,  paying 
when  he  has  the  money,  and  letting  the  bills  run  on  to 
maturity  when  his  trade  is  dull. 

The  disadvantage  to  the  dealer  of  not  having  any  es- 
timate of  the  receipts  of  cash  in  his  business,  and  of  inat- 
tention to  this  in  getting  credit  for  his  purchases,  will  be 
the  maturing  of  his  obligations  at  periods  when  he  has 
not  sufficient  business  resources,  but  must  depend  upon 


I:    t 

i 


72 


One  Cause  for  Jfhiture  to  :Pay. 


boiTowing  to  meet  them.  The  $5,500  of  goods,  which 
the  dealer  would  require  to  buy  on  credit,  in  the  case  he- 
fore  mentioned,  must  have  some  specific  pay-day.  Per- 
haps it  is  four  months  off;  and  the  dealer  seems  to  have  a 
very  easy  time  when  he  gets  his  goods  home,  and  they 
sell  off  freely.  He  has  so  much  money,  and  pay-day  is  so 
far  away  that  lie  can  go  again  in  a  month  and  buy  some 
more  goods ;  increasing  his  stock  perhaps  a  thousand 
dollars,  and  paying  cash  for  the  most  of  it.  Soon  he  is 
within  one  month  of  the  maturity  of  his  first  purchases, 
and  the  money  that  seemed  so  plentiful  before,  is  all  at 
once  scarce.  The  busiest  months  of  the  season  have  o-one 
by,  and  now,  when  there  is  but  little  selling,  and  less  col- 
lecting from  outstanding  accounts,  his  heavy  payments 
are  due.  By  borrowing  and  scraping  he  may  possibly 
make  up  the  amount,  but  the  chances  are  he  is  short,  and 
has  to  go  to  the  wholesale  dealer  with  a  long  story  of 
"  dull  trade  " — "great  many  of  the  goods  bought  of  you 
still  on  hand  "^and  requires  one-half  the  account  extend- 
ed over  a  couple  of  months.  Such  retailers  often  find 
that  the  next  time  they  want  to  buy,  the  goods  seem  dear- 
er in  that  house  than  in  other  places,  and  so  they  shift 
their  patronage  to  another  place,  to  go  through  the  same 
experience  there,  at  every  little  crisis  in  money  matters, 
or  stagnation  in  trade. 

A  dealer  who  will  arrange  all  the  subjects  treated  of 
in  this  chapter  methodically  in  his  memorandum  book, 
so  that  he  can  readily  refer  to  them  whenever  his  mem- 
ory is  at  fault,  transacts  this  part  of  his  business  in  a  way 
which  gives  every  one  with  whom  he  deals  the  impres- 
sion that  he  is  a  man  of  order  and  regularity  in  his  busi- 
ness— two  essential  requisites  for  a  merchant — and  thus 
lays  the  foundation  for  a  good  credit.  While  the  one 
who  disregards  these  details,  and  buys  his  goods  at  ran- 


Goods  Well  Sought  are  Mil/  Sold, 


73 


dom,  taking  credit  as  he  can  get  it,  more  by  chance 
than  calculation,  will  find  that  no  matter  how  great  his 
capital  may  be  at  starting,  he  will  be  long  in  obtaining 
a  first-class  reputation  or  credit  as  a  merchant. 

It  is  an  old  adage  among  merchants  that  "  goods  well 
bouQ:ht  are  half  sold."  It  is  as  true  as  it  is  old.  One 
merchant  in  a  town  often  buys  his  goods  a  full  profit 
cheaper  than  his  rivals  do,  so  that  he  could  sell  to  the 
majority  of  them  at  the  same  prices  they  pay,  and  make 
a  fair  living  by  it.  One  of  the  first  things  for  a  beginner 
to  learn,  therefore,  is  how  to  buy  his  goods.  Generally 
too  much  reliance  is  placed  on  the  salesman  he  buys  from, 
or  the  regularity  of  prices  in  the  house  in  which  he  buys. 

If  a  man  would  consider  the  many  processes  most 
goods  go  through  in  the  manufacture,  and  the  risks  they 
run  in  many  ways  of  being  in  some  degree  more  or  less 
imperfectly  made,  he  would  not  think  it  strange  that 
goods  seemingly  the  same  are  of  different  prices  in  dif- 
ferent stores.  Frequently  some  little  difference  of  pat- 
tern or  color,  hardly  noticeable,  will  increase  the  cost  of 
manufacture  five  per  cent,  yet  a  manufacturer  will  take 
an  order  for  a  certain  quantity  of  these,  in  connection  with 
other  styles,  without  any  advance.  While  an  order  given 
by  another  wholesale  dealer  for  the  goods  of  increased 
cost  alone  will  be  charged  the  extra  five  per  cent.  If  both 
dealers  ask  the  same  advance  on  their  goods,  one  will  be 
five  per  cent  higher  in  price  than  the  other. 

One  wholesale  dealer  may  give  an  order  for  certain 
goods  at  a  fixed  price  of— say  $1,00.  Another,  seeing  the 
pattern,  thinks  that  if  he  could  get  it  a  little  inferior,  so 
as  to  be  able  to  sell  it  at  a  dollar,  it  would  suit  his  trade 
better.  The  manufacturer  is  just  as  willing  to  make  it  a 
little  lighter,  or  poorer  in  quality,  and  sell  it  at  ninety 


74  Reasons  TThy  Goods  Differ  in  ^^ce, 

cents.  It  would  take  a  "  smart "  man  possibly  to  tell  the 
difference  between  the  goods,  without  having  them  side 
by  side.  Indeed,  it  is  probable  that  sometimes  there  is  no 
difference.  The  manufacturer  took  the  order  thinking 
he  could  make  the  difference  by  slighting  the  work  a  lit- 
tle, but  found  it  so  much  trouble  to  reduce  it  just  ten  per 
cent,  without  reducing  it  still  more,  that  he  concluded 
subsequently  to  make  it  just  the  same  as  the  previous 
goods ;  though  he  speaks  of  it  as  being  inferior.  Or,  he 
may  have  purchased  a  lower  priced  raw  material  to  make 
it  of,  which,  on  working,  he  finds  to  his  own  astonish- 
ment is  just  as  good  for  this  especial  purpose  as  the  high- 
ei:  priced  was.  These  are  cited  only  to  show  some  of  the 
many  different  ways  by  which  variations  will  arise  in  the 
prices  of  goods,  which  are  in  the  main   similar. 

A  retailer  should  not  always  think  it  indicative  of  a 
desire  to  get  higher  profits  therefore,  if  he  fiEds  these 
differences  in  different  stores.  It  is  his  business  to  keep 
his  eyes  open,  and  buy  where  he  finds  the  article  cheapest. 
To  do  this,  he  must  acquaint  himself  well  with  the  qual- 
ities of  goods.  When  he  sees  a  piece  of  goods,  or  any 
article  he  would  purchase,  and  hears  the  price  asked  for 
it,  if  he  has  seen  it  in  another  place,  he  must  be  able  to 
remember  where  it  was,  what  the  price  was,  and  whether 
it  was  really  the  same,  or  better  or  worse  in  quality. 
When  he  is  called  upon  to  decide  upon  the  reasonable 
ness  in  price  of  some  new  style  or  manufacture  of  goods, 
he  must  be  able  to  compare  it  with  other  goods  nearest 
like  it,  and  know  enough  of  the  difference  of  cost  in  dif- 
ferent goods,  to  be  able  to  tell  what  price  the  new  arti- 
cle should  bear,  by  such  comparison.  If  he  desires  to 
purchase,  and  thinks  the  price  too  high,  but  cannot  find 
the  goods  lower,  prudence  would  dictate  buying  lightly, 
until  by  additional  supplies  the  price  is  brought  down. 


A  Good  Tiule  in  ^Buying, 


75 


Sometimes,  though,  it  occurs  that  the  nev»'  article  is  re- 
latively cheaper  than  the  old  with  which  he  compares  it, 
and  he  determines  that  it  is  so.  A  manufacturer  will  be 
induced,  in  some  dull  period,  to  take  an  order  to  manu- 
facture some  new  style  of  goods,  at  a  price  which  leaves 
him  without  adequate  profit.  This,  coming  into  the 
hands  of  the  wholesale  dealer,  is  sold  at  the  ordinary  ad- 
vance, in  the  supposition  that  though  the  manufacturer 
now  grumbles,  yet  when  more  of  the  goods  are  really 
wanted,  he  will  be  willing  to  make  them  at  the  old  price, 
and  the  wholesale  dealer  only  finds  out  his  mistake  when 
he  has  nearly  sold  out  the  goods  and  desires  to  obtain 
more.  In  such  cases  as  this  last,  the  retailer,  if  satisfied 
that  the  article  will  prove  saleable  as  well  as  cheap,  would 
be  justified  in  purchasing  more  freely.  It  is  this  ready 
decision  in  such  cases,  combined  with  a  good  memory  of 
prices  and  qualities,  and  good  taste,  or  rather  a  concord 
of  taste  with  the  community  for  which  he  purchases,  that 
makes  the  good  buyer. 

A  good  rule  in  buying  goods,  is  to  get  them  the  near- 
est possible  to  their  source  of  growth  or  manufacture. 
On  general  principles,  the  fewer  hands  an  article  has  pass- 
ed through  the  less  will  be  its  price. 

When,  therefore,  a  retailer,  accustomed  to  purchasing 
an  article  in  one  house,  finds  it  in  another,  from  which  the 
first  obtained  it,  it  is  good  policy  to  buy  it  in  the  latter, 
even  though  the  price  is  no  cheaper.  The  retailer  may 
not  at  first  get  the  advantages  in  that  house  that  the  old- 
er customer,  and  probably  larger  buyer  gets,  but  by  and 
by,  as  he  comes  to  be  known  as  a  regular  customer,  he 
has  reason  to  expect  that  he  will  obtain  them. 

A  shrewd  buyer  is  ever  keeping  in  mind  the  considera- 
tion as  to  how  he  may  dispense  with  all  the  middle-men 
between  himself  and  the  manufacturer  or  producer.  Even 


76 


€t 


Seatlnff  !l>07vn"  the  l^rice. 


when  he  has  at  last  got  into  direct  contact  with  these,  in 
his  buying,  he  is  then  still  considering  how  he  may  fur- 
ther cheapen  the  article,  by  furnishing  the  raw  material 
or  other  necessary  to  the  producer. 

Perhaps  this  subject  is  more  important  to  the  whole- 
sale dealer,  but  it  is  a  principle  which  can  always  be  pro- 
fitably borne  in  mind  by  the  retailer  too.  Especially  in 
the  purchase  of  what  are  called  the  leading  articles  of  the 
trade  ;  of  which  large  quantities,  comparatively,  are  sold, 
and  on  which  the  profit  is  generally  small. 

Shall  a  retailer,  in  buying  his  goods,  be  so  ungentle- 
manly  as  to  beat  down  in  price  ?  Unhesitatingly,  "  Yes," 
if  the  seller  requires  that  process  before  he  will  make  the 
lowest  prices  on  his  goods.  The  fault  is  in  the  seller  who 
puts  on  an  extra  price,  to  be  abated  by  the  beating  down 
process  of  the  buyer.  If  A  has  an  article  which  he  asks 
seventy-five  cents  for,  when  it  is  only  worth  seventy,  and 
B  wants  it,  and  cannot  find  it  anywhere  else,  and  he  has 
such  knowledge  of  A's  business  practice  as  to  believe  that 
he  will  sell  the  article  for  seventy  cents,  if  he  cannot  get 
the  seventy-five  cents,  there  is  no  good  reason  why  B 
should  not  ofler  the  seventy  cents,  and  use  all  truthful 
arguraonts  to  induce  A  to  sell  it  to  him.  And  yet  the 
habit  of  *'  beating  down  "  is  always  a  bad  one  for  a  buyer 
to  get  into ;  for  so  soon  as  a  man  is  known  to  be  one  who 
always  requires  an  abatement  from  the  asked  price,  be- 
fore he  will  buy,  he  finds  enough  wholesale  dealers  who 
are  ready  to  meet  him  more  than  half  way,  and  who  pride 
themselves  on  getting  a  little  better  prices  out  of  such 
men  than  from  those  who  either  pay  the  price  asked,  or 
decline  to  buy. 

It  often  happens  that  a  retailer  wants  an  article  to  sell 
at  a  certain  price,  as  one  dollar,  and  to  buy  it  so  as  to 
make,  say  fifteen  cents  profit.     The  wholesale  dealer  has 


TolUeness  M'ssentml  to  a  Good  !Suyer  77 

only  one  quality  of  the  goods  near  that  price,  and  for  this 
he  asks  ninety  cents,  at  which  price  it  may  be  reasonable 
enough,  but  it  does  not  afibrd  the  retailer  a  satisfactory 
profit.  In  such  cases  it  is  very  jjroper  for  the  purchaser 
to  tell  his  desire,  and  ask  if  he  can  not  be  accommodated 
by  a  reduction  in  price  to  eighty-five  cents.  Such  a  re- 
duction may  be  regarded  as  a  favor,  and  not  a  strict  busi- 
ness transaction. 

There  is  no  rule  which  can  be  adopted  or  given,  which 
should  govern  a  buyer  in  all  cases.     Some  men  are  so 
avaricious  that  when  they  offer  an  article  to  a  purchaser 
at  a  set  price,  say  fifty  cents,  and  the  buyer  takes  it 
without  remark,  they  think  within  themselves,  '*  that  was 
sold  too  cheap.    He  would  have  given  fifty-five  centsjust 
as  readily."    In  consequence,  the  next  article  they  offer, 
they  add  on  a  little  to  the  price.     It  will  hardly  do  for  a 
retailer  to  say  "I  will  not  trade  with  such  men,"  for  they 
may  have  the  exclusive  sale  of  goods  which  he  can  not 
profitably  be  without.     The  true  course  is  to  deal  with 
themjustsofar  only  as  one's  interest  is  advanced.     To 
give  preference  first,  to  those  who  sell  their  goods  fairly, 
if  they  have  the  articles  required. 

A  reasonable  amount  of  suavity  and  politeness  is  as  es- 
sential to  a  good  buyer,  as  it  is  to  a  good  salesman.  If  a 
man's  manner  is  hard,  imperious  and  domineering,  char- 
acteristics which  buyers  sometimes  like  to  assume,,  even 
when  they  are  not  natural  to  them,  as  if  they  were  "doing 
the  seller  a  great  favor  in  buying  of  him,  they  will  find 
that  concessions  in  price  are  rarely  made  to  them,  nor  are 
the  most  desirable  goods  put  forward  when  they  inquire. 
Such  are  reserved  for  those  who  are  friends  as  well  as 
customers.  Besides,  wholesale  dealers  of  the  best  class, 
who  feel  confident  that  their  goods  are  reasonable  in 
price,  and  many  of  them  perhaps  more  reasonable  than 


78 


Measure  of  the  Seller* s  Complaisance, 


can  be  generally  obtained,  are  sometimes  independent 
enough  to  resent  such  imperious  airs,  and  are  particularly 
non-complaisant  to  such  customers,  who  are  thus  thrown 
off  as  it  were,  and  forced  to  buy  their  goods  in  houses 
where  for  the  sake  of  the  extra  profit  they  get,  they  can 
afford  to  meekly  put  up  with  an  unpleasant  customer.  It 
is  in  this  as  in  many  other  things.  The  degree  of  com- 
plaisance is  measured  by  the  profit  made.  Two  and  a 
half  per  cent  profit — seller  very  independent ;  five  per 
cent — a  kindly  nod  of  recognition  ;  ten  per  cent — a  low 
bow  ;  twenty-five  per  cent — an  obsequious  deference. 

A  young  country  merchant  coming  to  a  large  city  to 
buy  goods,  met  as  he  came  oft'  the  steamboat,  a  wholesale 
dealer  in  tapes,  buttons,  etc.,  with  whom  he  was  slightly 
acquainted.  As  they  walked  up  the  street  together,  the 
citizen  was  especially  earnest  to  carry  a  small  satchel  for 
the  countryman,  which  the  latter  had  in  his  hand.  "  1 
could  not  understand,"  said  the  countryman  in  telling  me 
of  it,  "  why  he  should  press  his  services  on  me  so  repeat- 
edly, seeing  that  the  satchel  was  a  light  one,  and  I  the 
younger  and  apparently  stronger  man,  and  therefore  bet^ 
ter  able  to  carry  it ;  but  as  we  went  by  his  store,  he  in- 
vited me  in,  and  when  I  found  that  he  asked  about  ten 
per  cent  more  for  his  buttons  than  others  did,  I  under- 
stood the  reason  for  his  extreme  politeness." 

Some  buyers  have  a  disagreeable  practice  of  undervalu- 
ing goods  they  do  not  want  to  buy,  which  can  not  be 
commended.  A  salesman,  with  a  desire  to  please  them, 
or  to  bring  to  their  notice  some  article  which  he  considers 
especially  noted  for  its  beauty,  quality  or  reasonableness 
in  price,  exhibits  it,  and  the  buyer  not  needing  the  goods, 
accompanies  his  refusal  with  some  disparaging  remark 
counter  to  the  salesman's  commendation.  Such  remarks 
are  doubtless  frequently  made,  to  convey  to  the  seller  an 


2>epreclalmff  t?ie  Goods, 


79 


idea  that  the  buyer  will  purchase  anything  if  he  will  only 
offer  it  cheap  enough,  or  if  it  is  only  handsome  enough, 
and  thus  to  induce  him  to  offer  some  other  goods  cheaper, 
to  try  to  effect  a  sale.  But  it  is  better  for  the  buyer  to 
decline  to  buy  without  assigning  a  reason,  or  to  say  can- 
didly  *'  it  is  cheap  enough,"  or  "  very  handsome,  but  I  do 
not  want  to  buy  it."  Instances  are  frequent  where  goods 
were  purchased  by  the  wholesale  dealer,  with  the  expec- 
tation that  they  would  exactly  suit  some  special  custo- 
mer. When  the  customer  saw  the  goods,  being  uncer- 
tain whether  he  had  any  need  of  them,  he  made  such 
disparaging  remarks  about  them,  that  the  wholesale  deal- 
er was  fain  to  sell  them  the  first  opportunity  at  cost,  and 
when  in  a  day  or  two  afterward  the  party  for  whom  the 
goods  were  especially  bought,  having  meanwhile  looked 
over  his  stock,  and  concluded  that  he  reaJly  required  such 
goods,  came  back  desirous  of  buying ,  he  found  to  his 
mortification,  that  the  goods  were  all  sold,  and  could  not 
be  replaced.  Such  courses  tend  to  destroy  that  friendly 
confidence  which  should  exist  between  the  buyer  and 
seller,  the  loss  of  which  is  to  the  disadvantage  of  the 
buyer  sometimes,  as  well  as  to  the  seller. 


The  ^isks  of  the  Creditor. 


81 


fn 


CHAPTER  y. 

OBTAINING    CREDIT   ON   PURCHASES. 

THE  surest  and  most  pleasant  way  for  a  retailer  to 
obtain  credit  for  such  goods  as  he  needs,  is  not  to  want 
the  credit.  If  his  business  is  so  arranged  and  managed 
that  he  can  make  his  living,  and  something  over,  without 
the  necessity  of  asking  for  credit,  and  this  is  generally 
known — if  he  has  any  reputation  for  probity — he  will 
soon  have  more  goods  offered  to  him  on  credit  than  he 
can  use  to  advantage. .  Some  men  seem  to  regard  credit 
as  a  thing  they  can  create  spontaneously — out  of  nothing ; 
and  hence  use  all  sorts  of  schemes  and  devious  plans  to 
obtain  it  in  the  houses  they  wish  to  buy  goods  from. 
Whereas  credit  is  as  naturally  a  growth  from  mercantile 
confidence,  as  is  the  summer  vegetation  from  the  sun's 
warmth  and  the  spring  showers.  And  to  endeavor  to 
obtain  credit  without  first  establishing  confidence  would 
be  as  foolish  as  trying  to  make  a  shrub  bloom  in  the  ab- 
sence of  warmth  and  moisture.  It  could  only  be  done  at 
more  expense  than  profit. 

Mercantile  confidence  is  largely  founded  on  the  belief 
that  he  in  whom  confidence  is  reposed  is  in  no  need  of 
credit  to  insure  his  prosperity ;  that  he  has  within  him- 
self all  that  is  requisite  for  success,  and  is  not  dependent 
on  the  aid  of  others  whose  inability  or  unwillingness  to 
further  help  him  may  cause  his  failure  in  business.  One  of 
the  most  efficient  requisites  in  making  a  man  thus  self- 
sustaining  is  sufficient  means  or  capital  in  his  business  or 
out  of  it,  to  enable  him  to  bear  such  losses  as  may  pos- 
sibly occur  in  his  business. 


Every  man's  experience  teaches  him  that  losses  will 
occur ;  very  often  to  the  ignorant  and  improvident,  and 
sometimes  to  the  most  prudent  and  careful ;  and  if  the 
loser  has  no  means  of  his  own,  the  loss  must  be  sustained 
by  others.  Precisely  in  proportion  to  the  limited  amount 
of  the  loser's  means  is,  therefore,  the  risk  of  loss  in  such 
cases  to  those  who  credit  him.  As  prudence  and  care 
will  frequently  obviate  a  loss,  or  at  least  reduce  its  amount, 
the  possession  of  these— or  in  other  words,  business  tal- 
ent which  includes  both  with  some  other  good  qualities- 
is  necessary  in  addition  to  capital,  to  create  full  confi- 
dence. 

Beside  the  risk  of  real  losses  in  the  business,  which  one 
has  to  encounter  who  trusts  a  retailer,  is  the  risk  of  dis- 
honesty.  The  risk  that  the  man  will,  for  the  purpose  of 
cheating  those  who  have  trusted  him,  secrete  his  assets  in 
some  way,  and  claim  to  have  lost  them  and  be  unable  to 
pay.  From  my  own  experience  I  have  the  charity  to  be- 
lieve that  such  cases  are  rarer  than  is  generally  thought. 
That  the  known  cases  of  dishonesty  are  usually  where  a 
man  who  is  in  failing  circumstances  hides  it  from  the 
world,  and  purchases  goods,  or  having  failed,  unduly 
magnifies  his  losses  and  secretes  his  property,  for  the  pur- 
pose of  making  a  more  favorable  settlement  for  himself. 
It  may  be  thought  that  the  distinction  is  too  finely  drawn, 
and  that  both  are  alike  swindlers ;  but  at  least  the  temp- 
tation is  greater  in  the  latter  case  than  in  the  former,  and 
the  guilt  is  of  all  shades  and  degrees,  from  that  of  him 
who  would  mildly  depreciate  the  value  of  his  assets,  to 
him  who  would  secrete  them  all,  while  in  the  case  of  one 
who  defrauds  his  creditors  when  he  is  not  in  danger  of 
insolvency,  the  guilt  is  unqualified  and  absolute. 

It  does  sometimes  occur  that  a  wholesale  dealer,  know- 
ing intimately  a  young  man,  and  having  full  confidence 


i 


82 


The  Confidence  of  Intimate  JFriends, 


in  his  business  ability  and  honesty,  is  willing  to  entrust 
him  with  goods  in  entire  absence  of  capital,  relying  sole- 
ly on  these  qualities  for  security.  .  But  generally  the 
goods  so  sold  take  the  place  of,  and  stand  in  lieu  of  cap- 
ital, for  though  the  buyer  may  and  often  does  pay  for 
them  regularly  at  the  expiration  of  the  term  of  credit, 
yet  he  is  in  the  meanwhile,  from  time  to  time,  buying  other 
goods  to  replace  those  sold,  and  has  therefore  a  quantity 
of  goods  always  on  hand  from  that  creditor  of  about  the 
oriirinal  amount.  The  wholesale  dealer  furnishes  the 
capital,  simply  furnishing  it  in  goods  instead  of  money. 

The  absence  of  capital  would  ordinarily  be  taken  as 
evincing  a  want  of  caution  or  prudence  in  one  who  pro- 
poses to  commence  business  without  any,  or  with  a  very 
inadequate  amount,  and  no  inference  of  the  possibility  of 
getting  into  business  with  insufficient  means  can  be  drawn 
from  the  few  cases,  which  are  much  exaggerated,  of  per- 
sons who  have  been  very  successful,  though  originally 
commencing  without  means. 

Successful  men  who  have  started  with  limited  amounts 
of  capital,  sometimes  like  to  boast  of  their  success,  though 
having  had  but  fifty  or  a  hundred  dollars  to  start  the 
world  with.  But  when  such  cases  are  fully  investigated, 
it  is  found  that  they  had  some  kind  friend  behind  them, 
who  would  furnish  all  the  goods  they  needed  on  credit, 
and  wait  for  payment  till  the  goods  were  sold — a  favor- 
able connection  which  no  one  not  especially  befriended 
can  expect  to  obtain. 

Sufficient  capital  is  therefore  ordinarily  the  first  requi- 
site in  creating  confidence ;  when  to  this  is  added  busi- 
ness ability,  honesty,  integrity,  industry,  prudence,  econ- 
omy and  good  health,  the  list  is  nearly  complete. 

What  would  be  regarded  as  sufficient  capital  depends 
on  the  character  of  the  business,  the  place  where  it  is  to  be 


jBow  Credit  is  to  be  Obtained, 


83 


\) 


carried  on,  and  its  extent  or  magnitude.  This  subject 
was  discussed  at  length  in  the  first  chapter  of  this  book, 
and  if  the  reader  has  not  made  himself  familiar  with  the 
conclusions  there,  in  regard  to  the  amount  of  capital,  he 
is  referred  to  that  chapter  again. 

A  retailer  may  have  all  the  requisites  above  mentioned, 
however,  and  yet  not  be  able  to  avail  himself  of  them,  to 
the  extent  he  should  in  obtaining  credit.  It  will  there- 
fore be  my  object  to  reveal  what  little  of  mystery  there 
remains  on  the  subject. 

The  first  efibrt  of  the  person  wanting  credit  should  be 
to  bring  to  the  knowledge  of  those  from  whom  he  seeks 
the  credit,  such  circumstances  as  above  mentioned,  which 
tend  to  induce  confidence.  Sometimes  even  this  is  felt  to 
be  indelicate  and  unmanly.  The  man  says,  I  have  these 
qualities,  which  should  induce  confidence  ;  my  friends  and 
acquaintances  who  have  known  me  for  years  feel  that  con- 
fidence— in  all  my  intercourse  with  them  credit  has  been 
tendered  me  unsought,  and  it  is  degrading  to  my  sense  of 
self  respect  to  have  my  worthiness  in  this  matter  again 
brought  up  for  consideration.  It  is  no  doubt  true  that 
the  man  who  does  not  need  credit  can  have  a  more  inde- 
pendent spirit,  but  there  is  nothing  necessarily  mean, 
cringing  or  contemptible  in  any  retailer  making  known 
to  the  wholesale  dealer,  the  amount  of  his  capital,  his 
former  career,  and  the  circumstances  which  tend  to  show 
his  industrious  habits,  his  prudence  and  economy,  and  his 
opportunities  for  obtaining  a  thorough  knowledge  of  the 
business  he  proposes  to  engage  in.  It  will  naturally  oc- 
cur to  any  one  who  has  sufficient  sense  to  conduct  a  busi- 
ness that  the  other  qualifications  of  honesty  and  integ- 
rity are  more  appropriately  testified  to  by  some  one  else 
than  himself,  though  there  is  no  harm  in  speaking  mod- 
estly on  these  points  in  answer  to  direct  questions.    For 


7 


I 


i 

■  \ 


I 


n 


84  fteferences  and  Recommendations* 

the  ascertaiument  of  these  qualifications,  and  fuller  con- 
firmation of  all  others,  reference  may  be  made,  and  should 
always  be  tendered,  even  if  not  asked  for,  to  such  per- 
gons— friends  or  acquaintances  as  have  known  the  appli- 
cant for  a  considerable  time,   and   are  willing  to  certify 
to  them.      If   such  persons   reside  at  so   great  a  dis- 
tance that  the  party  to  grant  the  credit  can  not  conve- 
niently consult  with  them,  it  will  be  necessary  to  have 
their  certification  beforehand,  in  the  form  of  letters  of 
recommendation.     Such  reference  or  letters  of  recommen- 
dation must  be  to  or  from  individuals  known  to  the  one 
who  is  to  grant  the  credit,  either  personally  or  by  repu- 
tation, as  capable  of  judging  of  a  man's  character  and 
business  ability,  and  known  to  be  honest  enough  to  state 
the  facts  truly.     When  the  applicant's  references  are  un- 
known either  in  person  or  by  reputation  to  the  parties 
from  whom  he  solicits  credit,  his  chances  of  obtaining  it 
are  much  lessened.     Still  something  may  be  done  by  ob- 
taining the  endorsement  of  a  fourth  party  known  to  the 
giver  of  credit,  and  who  though  not  personally  acquaint- 
ed with 'the  applicant,  yet  knows  those  who  testify  to 
his  commercial  standing.     Such  an  endorsement  would 
probably  take  some  such  form  as  follows : 

rj^Q  ji ,  ^ d;  Co.,  New  York: 

Gentlemen  .-—Although  not  personally  acquaint- 
ed with  C D ,  the  bearer  of  this,  (from  the  ad- 
joining county  of  Jackson,)  yet  Messrs.  E and  F , 

who  recommend  him,  I  know  intimately.  They  are  not 
men  who  are  likely  to  be  deceived  in  estimating  a  man's 
business  character,  and  on  such  assurances  as  they  give 
of  the  bearer's  integrity  and  business  capacity,  I  would 
have  no  hesitation,  were  I  in  business,  of  giving  him 
credit  to  a  reasonable  amount,  say  one  thousand  dollars. 

G H ,  Banker, 

Van  Buren,  Ark. 


personal  Introductions  to  Credit. 


85 


It  may  be  well  to  remark  that  no  person  should  be 
mentioned  as  a  reference  in  such  cases  unless  first  spoken 
rid  his  consent  obtained.     If,  in  an  e-rgency,  so. 
Derson  is  named  as  reference,  whose  consent  to  act  as 
Loh  has  not  been  previously  obtained,  which  n^y  some 
times  happen,  it  should  always  be  mentioned  to  the  party 
from  whom  the  credit  is  solicited.    This  is  very  often 
done,  after  a  man  has  been  in  business  and  established  a 
credit  at  a  few  houses.    In  purchasing  in  another  house, 
and  giving  such  statements  of  capital  as  maybe  neces- 
:ary,'and;  name  or  two  for  reference,  the  buyer  may 

say,  "  I  also  buy  goods  of  J &  Co.,  and  E.  R ^ 

Co  ;  I  have  never  asked  permission  to  refer  to  them  but 
have  no  objection  to  your  enquiring  concernmg  me  from 
thim"  If  such  houses  choose  to  withhold  information 
when  called  on,  the  buyer  is  not  prejudiced  thereby, 
which  he  would  be,  were  those  to  whom  he  specially  re- 
ferred  disinclined  to  give  information. 

One  of  the  pleasantest  methods  of  obtaimng  credit  is 
through  the  favorable  introduction  of  soine  other  dealer 
orest'ablished  standing  and  reputation.    When  the  mtr^- 
ducer  is  a  man  of  just  the  right  stamp,  in  good  credit 
himtelf,  iVank,  open  and  sympathetic,  the  begimier's  path 
::  verV  plea;ant  one,  and  but  few  difficulties  wil    he  in 
the  way.    But  this  method  is  open  to  many  risks.    The 
man  who  pretends  to  be  our  friend  may  be  so  only  m  ap- 
Tamnce  or,  if  truly  so  to-day,  may  not  be  so  next  year. 
He  may  be  jealous  of  a  rival  in  business  in  the  beginner ; 
or  bTone  o    those  envious  souls  who,  while    riendly  to  a 
In's  face  are  pained  to  see  his  success.    There  are,  un- 
"nlT;  too  many  people  m  who  act  so  as 

eonfirrhe  truth   o/ Rochefoucault's  diabolic  remark 
"hat'here  is  something  in  the  misfortunes  of  our  friends 


ft 


m 


86  danger  of  ZTn/'riendly  Introductions, 

that  always  pleases  us."  Such  men,  after  they  have  iu- 
troauced  another  to  credit  in  a  house,  have  P^vately  so 
much  to  say  about  the  necessity  of  caution,  so  many  "  ifs 
and  "  buts,"  that  they  more  than  neutralize  all  the  good 
they  have  done,  and  the  giver  of  credit,  though  he^  may 
choose  to  send  the  goods  purchased  at  the  time,  is  mdis- 
poscd  to  renew  the  credit,  unless  he  can  obtam  some 
more  satisfactory  assurances.  And  in  so  deciding  does  just 
what  the  false  friend  desires.  The  person  he  introduced 
gets  the  goods  then  purchased,  and  feels  under  great  ob- 
ligation to  him  for  the  introduction,  while  his  credit  is 
really  injured  by  such  an  introduction. 

Even  when  the  introducing  merchant  means  well,  and 
has  a  friendly  intent  at  the  time,  the  influence  which  he 
has  over  the  new  dealer's  credit  in  the  houses  he  mtro- 
duced  him  in,  is  greater  than  is  desirable.     In  case  ot  a 
change  of  feeling  towards  his  friend,  from  rivalry  in  busi- 
ness,''or  other  cause,  he  has  it  in  his  power  to  do  a  great 
injury,  and  this  even  after  two  or  three  years  have  passed 
by.    The  wholesale  dealer  is  very  likely  to  consult  with 
the  original  introducer  of  a  customer,  from  time  to  time, 
afterward,  and  ask  how  the  person  introduced  is  succeed- 
ing, naturally  believing  that  the  friendship  which  was 
shown  in  the  introduction  still  continues.     It  only  needs 
innuendoes  and  hints  of  evil  omen  to  seriously  weaken  any 
credit  when  newly  established. 

A  man  who  obtains  credit  by  his  own  address,  and 
statements  and  references,  gets  more  within  the  affections 
of  the  party  who  gives  it,  and  has  less  to  fear  from  the  ill- 
natured  remarks  of  rival  dealers.  If  such  be  asked  their 
opinion  of  the  man's  prospects,  and  they  speak  disparaging- 
ly, allowance  is  made  for  envious  or  jealous  feeling  which 
may  possibly  influence  the  unfavorable  testimony ;  while 
in  the  former  case  the  wholesale  dealer  is  inclined  to  be- 


t 


discredited  Classes  and  Zocalities, 


87 


i 


lieve  that  the  new  dealer's  position  and  prospects   are 
even  worse  than  his  supposed  friend  hints. 

Another  disadvantage  of  an  introduction  by  a  friendly 
dealer  is  that  the  party  introduced  is  likely  to  have  his 
credit  and  standing  depressed  by  any  circumstances  which 
may  weaken  the  credit  of  the  party  introducing  him. 

Doubtless  the  disposition  to  this  influence  has  originated 
from  the  close  relations  that  often  exist  i)etween  the  two 
persons  in  such  cases.  As  when  an  old  merchant  introduces 
otie  who  has  been  many  years  in  his  employment ;  if  the 
old  merchant  should  subsequently  fail,  an  inference  might 
be  drawn  that  the  younger  one  had  not  obtained  his  busi- 
ness knowledge  in  a  good  school. 

When  a  man  finds  himself  thus  affected  in  credit,  by 
the  discredit  of  another  with  whom  he  has  friendly  asso- 
ciations, it  is  wise  to  broach  the  subject  at  once  to  his 
creditors,  and  show  them  as  he  best  can  that  the  mflu- 
cnces  which  brought  down  his  friend  are  in  no  danger  of 
undermining  his  prosperity.    He  may   with  great  pro- 
priety  refer  also  to  the   inducing   causes   of  his   friend  s 
failure-such  as  too  extensive  credit,  too  heavy  expenses, 
buying  too  freely,  etc.,  and  to  any  caution  that  may  have 
been  given  by  him,  which,  if  heeded,  would  have  prevent- 
ed the  unfavorable  result ;  ana  thus  show  that  he  was  fully 
awake  to  the  danger  that  befell  his  friend. 

To  so  great  an  extent  does  the  habit  prevail  among 
wholesale  houses,  of  connecting  together  acquaintances 
and  dealers  from  one  locality,  that  sometimes  nationalities, 
special  names,  or  all  the  residents  of  a  State,  are  separate- 
ly placed  under  the  ban  of  distrust,  and  refused  credit  be- 
cause the  wholesale  dealer  having  met  with  so  many 
losses  from  the  class,  distrusts  all  of  them.  One  will  not 
sell  any  more  to  Jews,  another  distrusts  all  Irishmen,  and 
a  third  is  suspicious  of  all  Frenchmen. 


88 


Creditors'  Prejudices, 


1 


I  ! 


An  anecdote,  current  about  1842,  after  the  commercial 
troubles  of  183G  and  1840,  illustrates  this  disposition  in 
the   extreme.    A   wholesale    house    in    New  York   city 
had  met  with  so  many  losses  from  Michigan  customers, 
as  they  tried  different  ones  season  after  season,  that  their 
patience  was  exhausted,  when  one  day  a  countryman  call- 
ed in  their  place  of  business  and  desired  to  look  at  some 
goods.     "  For  what  part  of  the  country  do  you  buy  ?" 
was  the  natural  query  in  a  cheerful  tone.     "For  Michi- 
gan," the  response.    "  Michigan  r  echoes  the  jobber,  and 
with  changed  features  and  voice,  "  I  do  not  sell  goods  to 
Michigan."     "  Oh,"  says  Michigan  man,  "  I  don't  want 
credit.     I've  got  the  money  to  pay  for  what  I  buy."     "I 
don't  care  if  you  have,  you  can't  buy  goods  in  my  store, 
I  have  been  cheated  so  by  everybody  I  sold   goods   to 
from  Michigan,  that  even  if  you  bought  for  cash  I  should 
get  swindled  some  way  in  the  operation  I" 

Men  who  disburse  credits  are  not  always  governed  by 
reason  in  giving  them.  A  merchant  doing  a  large  busi- 
ness  in  New  York  city,  whose  credits  amounted  to  mil- 
lions in  a  year,  told  me  that  he  always  looked  with  sus- 
picion on  any  applicant  for  credit  of  the  name  of  D 

^^  ^ '    (^ery   common   family  names.)     He  admitted 

that  It  was  an  unreasonable  prejudice,  arising  only  from 
having  been  grossly  cheated  two  or  three  times  by  persons 
of  these  names,  "  but,"  said  he,  "I  cannot  help  it.  The 
introduction  of  any  person  of  either  of  the  names  brings 
to  recollection  the  swindlers  that  cheated  me  before,  and 
for  the  time  I  seem  to  lose  faith  in  human  nature,  and 
am  disposed  to  make  very  severe  terms  with  the  appli- 
cant." 

A  retailer  seeking  credit  cannot  expect  to  know  all  the 
whims  and  prejudices  of  those  from  whom  he  seeks  it. 
But  such  of  them  as  may  be  general,  as  connected  with 


\i 


Introducer  must  he  in  Good  Credit, 


89 


his  nationality  or  the  region  from  which  he  comes,  or 
where  he  contemplates  doing  business,  or  his  opinions 
as  his  politics  oi-  religion,  if  of  a  kind  likely  to  prejudice 
people  against  him,  are  better  brought  up  for  consider- 
ation at  once  ;  and  if  the  party  from  whom  the  credit  is 
solicited  shows  any  tenderness  on  that  score,  have  the 
matter  fully  discussed,  rather  than  leave  it  to  rankle  in 
the  creditor's  mind.  Whims  and  prejudices  of  this  kind 
only  need  to  be  dispassionately  discussed  and  brought  to 
the  light,  to  be  shorn  of  all  influence.  In  truth,  we  are 
so  constituted  as  to  take  rather  firmer  hold  of  any  ac- 
quaintance or  project  which  we  were  at  first  prejudiced 
against,  after  we  see  clearly  that  our  objections  were  un- 
founded prejudices.  A  sense  of  justice  induces  us  to  be 
more  liberal  toward  such,  to  compensate  for  the  injustice 

first  done  them. 

The  applicant  for  credit  must  be  guarded  against  an 
over  confidence  in  the  mercantile  standing  of  the  retailer 
Who  is  introducing  him  to  credit.     It  sometimes  happens 
that  retailers  have  a  good  local  reputation  for  standing 
and  credit,  whieh  is  not  maintained  in  the  quarters  where 
they  purchase  their  goods.     Personal  or  family  pride  may 
induce  a  man  to  be  upright  and  prompt  in  all  his  trivial 
business  transactions  at  home,   whereby    he   obtains  a 
good  standing  there,  while  on  account  of  repeated  fail- 
ures to  meet  his  bills  at  maturity,  and  other  unbusiness- 
like doings  in  the  place  where  he  buys,  his  credit  is  poor. 
It  is  therefore  of  more  consequence   to  the  applicant 
for  credit,  that  the  person  who  introduces  him  is  in  good 
credit  in  the  houses  in  which  he  is  introducing  him,  than 
that  he  is  simply  in  good  standing  at  home. 

It  will  always  be  prudent  for  a  beginner — when  so  in- 
troduced—to take  the  first  opportunity  of  finding  out 
exactly  how  liis  introducer's  credit  stands  in  that  house. 


Ht 


h^' 


if, 


90 


A  "Retaller^s  Bxpe7^ie7icc, 


Sometimes  the  members  of  the  house  approach  the  new 
customer  with  enquiries,  made  indirectly,  about  tlie  busi- 
ness of  the  one  who  introduced  liira.  This  may  be  re- 
garded as  an  additional  hint  or  admonition  to  be  on  his 
cruard  in  relation  to  his  introducer's  credit,  at  least  to   en- 

quire  about  it. 

The  recollection  of  several  cases  in  my  o^^ti  experience 
where  persons  were  introducd  by  men  in  doubtful  stand- 
ing, and  on  that  account  were  long  in  obtaining  the 
credit  they  really  deserved,  induces  me  to  dwell  somewhat 
at  length  on  this  subject. 

One  instance,  in  particular,  is  recollected,  where  the 
beginner*  had  been  a  clerk  for  the  person  introducing  him, 
and  was  distantly  related  to  him.  His  employer  and 
relative  was  doing  a  large  and  apparently  prosperous 
business  in  a  western  city,  and  was  regarded  at  home 
by  his  clerks  and  acquaintances,  as  in  a  flourishing  con- 
dition and  in  the  best  of  credit.  He  was,  however, 
known  in  New  York  by  those  who  sold  him  goods  on 
credit,  to  be  a  careless  purchaser,  ignorant  to  a  great  ex- 
tent of  the  values  and  peculiar  details  of  many  of  the  goods 
he  dealt  in,  and  so  uncertain  in  making  his  payments, 
that  half  the  time  his  notes  had  to  be  renewed,  in  conse- 
quence of  all  which  his  credit  was  weak. 

The  friend  he  introduced,  who  claimed  to  have  less 
than  half  as  much  capital  as  he  had,  was  very  lukewarm- 
ly received.  Credit  was  given  to  him  in  some  houses  on 
account  of  his  paying  a  part  cash,  and  the  season  follow- 
ing, in  some  instances  this  was  refused,  although  he  had 
paid  promptly. 

For  a  period  of  over  a  year  the  new  dealer  continued 
in  a  sort  of  despairing  way,  generally  making  his  period- 
ical visits  to  New  York  in  company  with  his  friend,  and 
going  around  from  store  to  store  with  him,  availing  him- 


^efriending  a  F'riend, 


91 


self  of  his  friend's  sheltering  SBgis,  as  he  thought  to  his 

advantage. 

I  had  sold  him  goods  on  credit,  and  found  him  always 
prompt  in   paying,   well   acquainted   with   the   peculiar 
values  and  qualities  of  the  articles  he  dealt  in,  and  be- 
came satisfied  that  he  could  be  successful  as  a  retailer  if 
he  had  a  fair  chance.     Having   grown   somewhat  inti- 
mate, he  did  not  hesitate  to  disclose  to  me  the  difficulty 
he    experienced    in  getting    the  limited  but   necessary 
credit  for  his  business.     Telling  me  that,   on  the  present 
visit,  parties  who  had  before  sold  him  goods  and  who 
had    been   promptly  paid,   had    declined   crediting  him 
again.     I  told  him  what  I  believed  to  be  the  cause ;  that 
the  friend  introducing  him,  in  whose  company  he  so  fre- 
quently was,  was  regarded  as  in  a  doubtful  position,  and 
this  had  its  influence  on  his  credit.     And   suggested   to 
him  that  his  chances  for  obtaining  credit  would  be  much 
increased  by  keeping  aloof  from   this  friend ;  and  as  he 
wanted  credit  in  other  houses,  to  refer  rather  to   those 
who  were  crediting  him,  instead  of  relying  on  his  friend's 
indorsement  of  character.     The  suggestion  was  acted  up- 
on, and  thereafter  he  had  no  difficulty  in  getting  the  rea- 
sonable credit  he  needed,  and  in  a  few  months,  by  his 
promptness  in  paying,  he  attained  a  standing  in  the  mar- 
ket far  better  than  that  of  his  former  employer. 

Wholesale  dealers  sometimes  require  that  the  applicant 
for  credit  shall  sign  a  written  statement,  setting  forth 
specifically  the  amount  of  his  assets  and  liabilities,  and 
the  character  of  the  latter,  whether  "confidential"  or 
"  general,"  together  with  such  other  particulars  as  may 
be  thought  necessary  to  enable  the  giver  of  the  credit 
to  pass  upon  the  responsibility  of  the  applicant.  Such 
a  written  statement   is   deemed  particularly  necessary 


92 


Making   Written  Statements, 


I 


when  the  applicant  is  suspiciously  in  doubt  about  the 
amount  of  his  assets  and  liabilities.  Guessing  and  sup- 
posing at  amounts  that  he  should  be  able  to  give  ac- 
curately, and  the  written  statement  is  therefore  required 
to  bring  the  confused  verbal  statements  to  exactness. 
The  applicant  "guesses"  his  stock  of  goods  is  worth 
about  $10,000;  "thinks"  he  owes  about  $3,500,  and 
"  supposes  "  about  a  quarter  of  that  is  borrowed  money, 
and  "  confidential."  But  when  these  amounts  are  writ- 
ten down  as  a  specific  statement  of  his  afiairs  for  him  to 
sign,  and  make  a  basis  for  the  credit  to  be  given  him,  he 
needs  to  modify  them  considerably.  Or,  as  is  frequently 
the  case  with  such  men,  he  begins  to  bluster  about  "  never 
having  been  called  on  to  sign  any  statement  before,  and 
won't  do  it  now."  Sometimes,  with  more  shrewdness,  he 
may  sign,  but  takes  care  to  buy  no  goods  in  that  house, 
lest  if  he  did  and  did  not  pay,  he  might  have  to  stand  a 
trial  for  obtaining  goods  on  "  false  pretenses." 

Ordinarily  a  request  to  sign  a  written  statement,  upon 
the  character  of  which  the  credit  is  proposed  to  be  grant- 
ed, evinces  a  want  of  faith  in  the  verbal  statement.  No 
man  would  care  for  a  written  statement  iu  such  cases,  if 
he  was  sure  that  the  oral  statement  is  true,  as  it  does  not 
add  a  particle  to  the  applicant's  ability  to  pay.  It  is  only 
when  he  thinks  that  the  oral  statement  is  possibly  false, 
that  he  requires  it  in  writing.  His  reasoning  is  this ;  if 
the  statement  is  true  the  applicant  can  pay  the  debt;  if 
it  is  false  he  must  pay  or  encounter  the  risk  of  a  criminal 
prosecution  for  "false  pretenses." 

The  creditor's  reliance  is  in  part  the  same  that  money 
lenders  are  said  to  sometimes  depend  on  when  a  bor- 
rower forges  an  endorsement  on  his  note  which  they  dis- 
count. They  have  well  grounded  reasons  for  believing 
that  the   endorsement  is  a  forgery,  but  so  long  as  the 


Caution  about  Making  Statements, 


93 


drawer  has  a  family  or  social  position  to  be  sacrificed  by 
the  disclosure  of  his  crime,  he  has  the  greatest  of  all  in- 
ducements to  conceal  the  forgery  by  the  prompt  payment 
of  the  note. 

Every  person  soliciting  credit  should  therefore  be  very 
cautious  about  the  verbal  statements  he  makes,  that  they 
are  the  unexaggerated  truths,  and  whicli,  if  circumstances 
require  it,  he  can  put  his  name  to,  and  buy  goods,  con- 
scientiously satisfied  that  he  is  not  deceiving  those  who 
are  crediting  him.     And  yet  even  with  such  care,  the  fre- 
quent adoption  of  this  method  by  a  seeker  after  credit  is 
not  advisable,  as  the  habitual  use  of  it  will  not  confirm 
his  honorable  standing   among  dealers.     I  shall  not  say 
he  ought  never  to  put  his  name  to  a  statement  of  this 
character,  because  circumstances  might  occur  that  would 
render  it  advisable  to  re-establish  a  credit,  if  not  to  ob- 
tain one  at  the  outset.     Some  independent  readers  may 
not  coincide  with  this  remark,  and  think  that  an  honest 
man  should  never  so  demean  himself  for  the  sake  of  get- 
ting goods ;  that  he  had  better  go  out  of  business  than 
to  so  humiliate  himself.     But  it  is  easy  to  believe  that 
Wfc  would  act  very  independently  on  particular  occasions, 
though  when  the  trial  comes  we  are  governed  by  the 
same  influences  as  others,  and  act  pretty  much  as  others 
do.     Suppose  a  case  of  a  business  man  in  good  standing 
and  character  at  home,  in  business  for  years,  and  with  an 
honorable  pride  in  his   commercial   and  social  standing, 
finding  on  coming  to  market  to  make  his  season's  pur- 
chases, that  exaggerated  rumors  of  heavy  losses  having 
befallen  him,  through  endorsing  for  some  friend,  had  pre- 
ceded him,  and  were  current  among  those  who  had  cred- 
ited him.     And  this  induced  a  general  refusal  to  renew 
credit,  and  he  could  not  obtain  the  goods  he  required  for 
his  trade,  even  after  the  most  thorough  explanations,  and 


94         The  Technical  Meaning  of  JTords  used. 

assertions  of  his  continued  responsibility,  while  a  written 
statement,  which  if  untrue,  would  hold  him  criminally, 
might  be  all  sufficient  to  restore  confidence.  The  man  is 
placed  in  the  dilemma  that  he  must  either  give  this  state- 
ment or  go  home  without  goods,  and  not  only  betray  to 
his  friends  and  neighbors  at  home  his  mortification,  but 
perhaps  really  be  made  insolvent  by  the  breaking  up  of 
his  business.  Will  it  be  derogatory  to  his  reputation  to 
give  such  a  written  statement,  if  thereby  he  obtains  the 
goods  he  needs  for  his  business,  continues  to  pay  his  debts, 
lives  down  the  unfavorable  rumor,  and  retains  the  es- 
teem and  confidence  of  those  around  him  ? 

Such  humiliations  all  are  subject  to,  more  or  less,  that, 
depend  largely  upon  credit  in  obtaining  goods  or  money 
to  prosecute  their  business.  The  good  book  saith  no- 
thing more  truly  than  that  the  "-  borrower  shall  be  servant 
to  the  lender."  The  possibility  of  such  mortifications 
should  be  an  additional  reason  for  arranging  a  business 
on  such  a  basis  that  extensive  credit  will  not  be  needed. 

When  a  written  statement  has  to  he  given,  it  is  not 
only  essential  that  it  be  true  according  to  the  idea  of  tho 
signer,  but  that  it  is  true  according  to  the  technical  or 
business  meaning  of  the  words  used.  The  full  import 
of  these  should  be  clearly  understood  by  the  signer. 

A  young  man  about  coramencmg  business  told  the 
writer  in  answer  to  questions  asked  with  reference  to  a 
credit,  that  he  had  $5,000  capital,  $3,000  his  own,  and 
$2,000  borrowed  from  his  father.  I  asked  him  if  the 
$2,000  borrowed  was  at  the  risk  of  the  business.  He 
said  it  was.  But  in  a  further  conversation  with  him  in 
relation  to  his  father's  means  of  living  and  his  ability  to 
bear  the  loss  of  the  two  thousand  dollars  in  case  the  busi- 
ness was  not  successful,  with  a  view  to  test  his  disposition, 
about  this  sum  in  the  event  of  failure ;  he  remarked  that 


<*At  the  ^isk  of  the  business:' 


96 


"his father  did  not  risk  much,  as  of  course  he  would  be 
paid  if  no  one  else  was."     As  this  did  not  accord  with 
his  statement  that  the  12,000  was  at  the  risk  of  the  busi- 
ness, I  asked  an  explanation,  and  then  found  that  the 
young  man's  idea  of  "  at  the  risk  of  the  business,'  was 
that  his  father  had  no  security  for  the  money,  and  if  he 
lost  all  and  could  not  pay  him,  his  father  would  have   to 
bear  the  loss,  and  would  not  hold  it  as  a  debt  against 
him.    When  I  explained  to  him  that  "  at  the  risk  of  the 
business  "  meant  in  commercial  parlance,  to  be  at  hazard 
till  all  the  other  debts  were  paid,  and  that  on  such  a  state- 
ment as  he  had  made  me,  he   would  be  bound  to  pay 
everybody  else  before  he  paid  his  father,  he  seemed  qmte 
surprised  ''  as  if  anybody  could  suppose  that  a  man  would 
pay  others  and  leave  his  own  father  to  suffer !" 

I  have  quite  often  known  persons  to  include  and  call 
"  capital  "  in  business,  certain  sums  which  were  borrowed, 
and  which  were  considered  as  the  most  "  confidential "  of 
any  debt  the  dealer  could  make.  When  the  so-called 
capital  is  made  up  in  this  way,  it  would  be  not  only  mor- 
ally  wrong  to  call  it  capital,  if  not  at  the  risk  of  the  busi- 
ness  but  without  explanation  of  the  circumstances,  it 
would  render  the  person  liable  in  case  of  fiiilure,  to  prose- 
cution and  punishment.  As  the  technical  mercanti  e 
raeanincr  of  "capital"  is  the  fund  that  is  ultimately  liable 
for  the  "payment  of  all  the  contracts  and  agreements  of 

the  business. 

Therefore,  if  a  man  states  that  he  has  $10,000  cap- 
ital "  he  virtually  says  that  he  has  $10,000,  which  stands 
as  security  for  the  general  obligations  he  may  incur 
Part  or  all  of  this  $10,000  may  be  borrowed  if  it  stands 
"  at  the  Yisk  of  the  business,"  as  his  own  means  does. 
But  if  it  is  understood  between  him  and  the  lender,  or 
if  it  is  his  intention,  that  in  case  of  difficulties  occurrmg 


96 


Orat  and  yf^ritten  Statements, 


\\ 


II 


in  the  business,  the  loan  shall  be  made  confidential  and 
paid  before  other  debts,  the  position  is  entirely  reversed. 
The  debts  which  the  dealer  creates  in  purchasing  goods, 
really  become  a  security  for  the  payment  of  this  so-called 
"  capital,"  instead  of  the  capital  being  security  for  the 
debts. 

The  prevailing  disposition  which  most  dealers  have  to 
magnify  their  capital,  and  the  frequent  miscomprehen- 
sions of  the  term,  which  I  have  noticed,  induces  me  to 
dwell  somewhat  at  length  on  this  subject.  The  inculca- 
tions on  this  point  may  serve  to  illustrate  for  all  others, 
the  necessity  of  fully  understanding  all  the  phrases  and 
technical  words  in  use  in  business. 

A  distinction  mav  seem  to  have  been  drawn  between  a 
false  oral  and  a  false  loritten  statement,  which  does  not 
exist.  Both  are  alike  censurable  and  punishable.  The 
diflference  mainly  is,  that  the  oral  statement  of  facts  is 
generally  qualified  by  words  or  phrases,  which  to  make 
more  definite  are  left  out  in  writing.  A  man  who  does 
not  really  know  what  the  amount  of  his  liabilities  are, 
may  say  "  I  do  not  think  they  will  exceed  $5,000."  This 
is  ve  y  different  from  the  definiteness  of  a  written  state- 
ment which  says,  "  my  liabilities  do  not  exceed  $5,000." 
One  asserts  an  opinion  merely,  the  other  a  fact. 

Confidence  in  one's  own  ability  to  conduct  a  business 
undertaking  prosperously,  is  of  great  advantage  in  ob- 
taining credit.  If  the  applicant  speaks  doubtfully  or  hes- 
itatingly of  his  prospects,  he  can  not  expect  that  the 
wholesale  dealer  of  whom  he  is  asking  credit  will  be  en- 
couraged to  have  confidence  in  the  enterprise.  A  strong 
faith  in  ultimate  success  generally  infuses  additional  life 
and  energy  into  the  work,  and  hence  it  is  more  likely  to 
prosper  than  when  it  is  prosecuted  with  doubt  and  hes- 


Iniportancc  of  Conscience  m  one's  on^n  Success*    97 

itation.     One  man  will  look  at  an  undertaking  and  say 
"  1  don't  believe  that  it  will  succeed,  but  I  will  try  it  and 
do  my  best ;  if  I  fail  the  fault  shall  not  be  mine."     An- 
other, looking  at  a  similar  enterprise  says,  "  1  know  this 
scheme  will  work,  and  1  can  accomplish  its  success."     It 
is  not  difiicult  to  understand,  that  of  the  two  men  start- 
ing in  business  with  these   different   ideas,    the   last  will 
get  credit  for  the  necessities  of  the   undertaking  where 
the  first  could  not.     The  sanguine  man  infuses  some   of 
his  spirit  into  the  mind  of  him  whom  he  asks  to  trust 
him,  and  to  some  extent  influences  his  decision  in  his  fa- 
vor.    While  the  influence  of  the  presager  of  misfortune 
is  just  the  reverse,  and  really  tends  to   take  away  any 
disposition  to  confidence  which  is  in  the  mind  of  the  per- 
son granting  credit. 

This  confidence  in  one's  success  should  be  a  well  ground- 
ed one,  and  not  the  swaggering  and  empty  boast  of  ig- 
norance, which  on  being  questioned  soon  betrays  itself. 
It  can  be  felt  only  when  a  person  has  so  fully  canvassed 
all  the  risks  and  contingencies  to  which  his  enterprise 
will  be  subjected,  that  he  is  prepared  to  confute  everv 
doubt  which  may  be  thrown  upon  it. 

It  is  always  well  to  have  the  subject  of  credit  settled 
at  once,  so  soon  as  the  dealer  decides  that  the  wholesale 
house  has  the  goods  he  wants  to  buy,  and  not  to  post- 
pone the  subject  day  after  day.  as  if  he  feared  to  undergo 
the  ordeal,  or  was  waiting  to  have  the  subject  broached 
by  the  wholesale  dealer  and  the  credit  tendered  to  him. 
Such  hesitation  gives  the  wholesale  dealer  an  unfavor- 
able impression,  inducing  him  to  regard  the  party  as  one 
who  has  not  confidence  in  his  own  merits. 


CHAPTER    YI. 


EXAMINATION,  MASKING  AND  ABBANGING  OF  GOODS. 

AFTER  the  goods  are  received  in  store,  the  first  thing 
to  be  done  will  be  to  thoroughly  examine  them,  to  see 
that  each  article  corresponds  in  quantity  with  the  amount 
charged  in  the  invoices,  and  that  there  are  none  of  them 
damaged.  Also  to  notice  that  thev  are  the  same  goods, 
corresponding  in  prices  and  qualities  with  the  samples 
shown  at  the  time  of  purchasing,  and  also  that  the  quan- 
tities are  the  same  as  were  purchased,  neither  more  nor 
less. 

Such  examinations  are  very  necessary,  not  solely  be- 
cause of  the  danger  of  fraud  or  deception  on  the  part  of 
the  wholesale  dealer  or  his  clerks,  but  to  guard  against 
unintentional  differences  or  mistakes,  though  sometimes 
necessary  to  protect  against  the  former. 

Goods  are  liable  to  abstraction  from  the  packages 
while  in  the  carriers'  hands,  and  are  at  all  times  more  or 
less  exposed  to  be  stolen,  so  that  a  habit  of  examination 
and  frequent  inspection,  even  after  they  are  in  store,  is 
necessary  to  guard  against  such  losses,  or  rather  to  de- 
tect the  loss  at  an  early  period,  so  as  to  adopt  means  to 
recover  the  goods  and  punish  the  thief.  But  more  es- 
pecially is  this  examination  required  when  the  goods  first 
come  into  the  retailer's  hands,  before  they  are  exposed 
for  sale,  so  that  if  anything  be  missing  it  may  clearly  ap- 
pear that  it  was  either  never  sent  or  abstracted  before  it 
came  into  his  possession.  When  goods  are  missing  it  is 
of  the  utmost  consequence  to  know  whether  they  were 


I '. 


JVotin^  Deficiencies  and  Damages, 


99 


1 


y 


omitted  in  packing  by  the  wholesale  dealer,  or  were 
abstracted  while  in  possession  of  the  carrier.  As  re- 
course must  be  had  to  the  one  or  the  other  to  make 
good  the  loss  according  to  the  place  where  it  occur- 
red. 

In  this  respect,  it  is  very  necessary  to  observe  carefully 
the  outside  condition  of  the  jjackages  or  cases,  before 
they  are  opened,  to  see  if  they  j^resent  the  appearance  of 
having  been  tampered  with  ;  and  also,  immediately  when 
opened,  to  notice  if  the  goods  seem  in  disorder,  as  they 
will  probably  be  if  a  part  of  the  contents  of  the  package 
or  case  has  been  stolen.  If  a  package  presents  evi- 
dence of  this  character,  it  is  well  to  call  some  disinter- 
ested person  to  notice  its  appearance,  and  to  aid  in  the 
examination  of  such  case  or  parcel,  who  can  testify  to  the 
quantity  of  goods  remaining  in  the  case  or  parcel,  if 
necessary.  And  if  the  carrier  or  his  agents  are  not  too 
distant,  and  the  goods  are  valuable,  it  may  be  well  to 
call  their  attention  to  it  beforehand. 

Any  deficiencies  in  quantity,  variations  in  price  or  qual- 
ity, or  damages  found  on  the  goods,  as  rents,  stains  or  the 
like,  should  be  immediately  reported  to  the  wholesale 
dealer,  giving  a  full  description  of  the  character  and 
amount  of  the  damage  or  claim  made,  and  the  deduction 
required  therefor.  Whenever  possible,  a  sample  show- 
ing the  character  of  the  damage  should  accompany  the 
notice,  and  when  it  is  an  error  in  price,  such  a  sample  is 
especially  necessary,  to  show  that  the  retailer  has  not 
mistaken  one  lot  of  goods  on  the  invoice  for  another  of 
different  price. 

A  retailer  should  always  make  it  a  point  to  give  early 
notice  of  any  claim  for  reduction  he  may  have,  and  not 
leave  such,  as  is  too  often  the  case,  until  the  bill  is  due, 
three  or  four  months  afterward.     By  an  early  notice  he 


100 


Cost  and  Selling  Marks, 


pives  the  wholesale  dealer  an  opportunity  to  make  a  re- 
clamation on  the  person  from  whom  he  obtained  the  goods. 
Coiu-tesy  requires  that  a  notice  of  a  claim  should  mention 
sufficient  of  the  circumstances  to  enable  the  wholesale 
dealer  to  pass  judgment  himself  on  the  propriety  and  rea- 
sonableness of  the  amount  claimed. 

Even  when  the  missing  goods  appear  to  have  been  ab- 
stracted while  in  the  carrier's  hands,  it  is  well  to  give  no- 
tice of  the  fact  to  the  wholesale  dealer.  His  evidence,  or 
that  of  his  employees,  may  be  necessary  to  satisfy  the 
carrier  that  the  missmg  goods  were  really  shipped  with 
the  others  which  were  received. 

^  The  goods  having  been  thoroughly  examined,  as  men- 
tioned, should  then  be  carefully  marked  with  the  full  cost 
and  selling  price  before  being  placed  on  sale. 

The  cost  and  selling  price  may  be  in  characters  of  any 
form  or  style,  each  one  representing  a  numeral,  or  they 
may  be  letters  of  the  alphabet.     The  first  ten,  last  ten,  or 
mtermediate  letters,  being  taken  to  represent  the  numer- 
als.    Sometimes  a  word  having  ten  letters  is  used  tor  such 
purpose,  each  letter  representing  a  numeral,  as  "  Cumber- 
land,''  "  Perth  Amboy,"  "  republican,"  and  many  others. 
A  very  convenient  cost  mark  is  a  combination  of  figures 
which  takes  the  form  of  a  number  on  the  goods,  sening 
both  to  indicate  the  cost  and  selling  price,  and  to  identify 
the  goods  by.     For  instance,  if  a  unit  is  added  to  each  fig- 
Tire  of  the  cost,  the  prices  10,  22,  45  and  115,    would 
be  respectively  represented  by  numbers  21,  33,  56  and 
226.     Or  to  the  first  figure  of  the  cost  one  may  be  added, 
to  the  next  two,  and  so  on.     If  more  complexity  be  de- 
sired, a  *' dummy  "  figure  can  be  inserted,  which  is   not 
counted,  which  may  be  placed  first,  second  or  last,  as  may 
be  decided  on.     Placed  second,  the  above  numbers  might 


!i 


Adding  Charges  to    'First  Cost,  IQl 

be  read  241,  363,  516,  2426,  still  representing  the  prices 
as  above.  A  little  custom  in  reading  a  mark  of  this 
character,  will  make  it  as  familiar  and  intelligible  as  the 
ordinary  numerals  of  the  invoice.  "Inquiries  are  often 
necessary  to  be  made  by  a  salesman  of  the  proprietor,  in 
reference  to  some  article  while  being  exhibited  to  a  cus- 
tomer, which  inquiry  can  only  be  answered  by  a  know- 
ledge  of  the  cost  of  the  goods.  It  is  a  much  less  objec- 
tionable way  of  referring  to  the  cost,  by  saying  that  it  is 
number  56,  than  to  say  it  cost  BC.  For  identification 
of  tlie  goods,  this  cost  number  may  be  used  in  every  en- 
try of  them,  when  sold  on  credit. 

The  marked  cost  on  the  goods  should  be  not  only  the 
*'  prime  "  cost  of  the  invoice,  but  should  include  the  ex- 
penses of  purchase,  freight  and  incidental  charges  up  to 
the  time  the  goods  are  brought  into  the  dealer's  ware- 
house,  and  the  rate  of  exchange.  All  these  additions,  tech- 
nically  called  "  charges,"  are  sometimes  so  trivial  when 
the  retailer  resides  near  the  place  of  purchase,  that  he 
does  not  consider  tliem  in  marking  the  cost  of  the  goods, 
but  suffers  these  items  to  go  into  the  general  account  of 
the  expenses  of  the  business.     I  can  but  regard  this  as 
objectionable,  whenever  these  charges  are  great  enough 
to  form  a  calculable  sum.     This  sum,  of  course,  will  vary 
according  to  distance  and  means  of  travelling  for  the  ex- 
pense of  purchase,  the  distance  and  bulk  of  the  goods  as 
compared  with  their  value  for  the  freight,  and  the  char- 
acter of  the  currency  in  use  at  the  two  places  of  buying 
and  selling,  for  the  rate  of  exchange.     Whatever  they 
may  amount  to,  whether  one,  two,   five    or   twenty  per 
cent  on  the  invoice  cost,  they  should  take  their  i,roper 
place  in  the  economy  of  the  business,  by  being  added  to 
the  price  of  the  goods,  and  not  be  allowed  to  swell  up 
the  yearly  expenses. 


( 


102 


T7ie  'Jiafe  of  f>ro/it. 


The  usual  custom  is  to  avcrac^e  these  expenses,  and  ajv 
ply  the  average  advance  on  oH  things  indiscriminately, 
which  may  answer  well  as  a  general  rule.     But  there  are 
some  kinds  of  business  wherein  it  would  not  answer,  and 
special  calculations  have  to  be  made  for  certain  articles. 
If  a  retailer  of  hardware  lives  at  such  a  distance  from 
the  entrepot  where  he  purchases  his  goods,  that  it  costs 
him  one  dollar  per  hundred  weight  for  freight,  he  could 
not   safely  average    this    freight  alike   on    woodscrews, 
cutlery,  and  other  comparatively  light  articles,  and  on 
cut  nails.     The  freight  alone  would  be  probably  five  per 
cent  on  cost  in  one  case,  and  twenty-five  on   cost  in  the 
other.     So  in  a  business  of  drugs  and  medicines.     Dye 
stufi's  which  are  often  a  part  of  such  a  business,  are  many 
of  them  very  bulky  in   proportion   to   their   value,   and 
would  require  a  different  rating.     A  retailer  might  make 
an  average  of  this  kind,  and  in  the  absence  of  competi- 
tion receive  no  injury  thereby.    As,  if  he  sells  some  things 
too  low,  he  would  sell  others  equally  too  high,  and  wouTd 
come  out  even  in  the  end.     But  if  ho  has  any  comi)eti- 
tion  his  customers  will  only  buy  those  articles  he  sells 
low,  and  will  go  to  his  rivals   for   those   he   sells   too 
high,  so  that  his  trade  would  soon  all  be  in  articles  on 
which  he  makes  no  profit. 

The  true  cost  of  the  goods  being  thus  ascertained,  the 
next  consideration  will  be  the  profit,  or  advance  to  be 
made  as  the  selling  price..  The  general  rule  for  this  is 
to  add  enough  to  cover  the  expenses  of  the  business,  such 
as  store  rent,  clerk  hire,  compensation  to  the  principal— 
for  living  or  household  expenses— probable  losses  by  de- 
terioration, bad  debts,  etc.,  and  besides  all  this,  suflicient 
to  leave  an  adequate  net  profit  to  the  proprietor  for  the 
capital  invested. 

Ordinarily  the  selling  price  is  controlled  by  the  prices 


^*rices  ntttst  noi  be  entirely  ^joyerncd  by  olhe?'s.  103 

of  rival  dealers,  but  it  would  not  do  to  let  these  govern 
entirely.  For  a  rival  might  in  sheer  ignorance  sell  many 
articles  less  than  actual  cost.  When  that  is  found  to  be 
the  case,  there  is  no  good  policy  in  following  his  lead.  It 
would  be  better  to  dispense  with  the  goods,  until  the 
rival  has  found  out  his  mistake,  or  gone  out  of  business. 
Generally  the  business  career  of  such  men  is  brief.  Even, 
therefore,  though  a  beginner  may  regard  the  prices  at 
which  he  will  sell  his  goods,  so  well  established  by  rival 
dealers,  that  he  expects  to  be  governed  by  them,  he 
ought  still  to  keep  before  him  the  principles  on  which 
profits  are  founded,  so  that  he  may  from  season  to  season 
review  his  course,  and  see  whether  by  leaving  oflT  some 
articles  which  are  unprofitable,  and  adding  others  which 
may  be  more  profitable  he  cannot  increase  the  net  gains 
oi  his  business. 

If  the  beginner  has  duly  considered  the  question  of  ex- 
penses, as  suggested  in  the  second  chapter  of  this  book, 
that  much  will  be  settled.  The  probable  losses  by  bad 
debts  and  depreciation  on  stock  must  be  estimated.  Both 
these  subjects  are  too  extensive  to  discuss  in  this  connec- 
tion, and  will  be  treated  of  in  future  chapters,  specially 
devoted  to  each,  to  which  the  reader  is  referred.  When 
all  these  expenditures  and  losses  are  estimated,  there  only 
remains  to  make  a  calculation  of  the  gross  profit,  or  ad- 
vance on  the  goods,  which  must  be  obtained  in  selling 
them.  , 

For  example,  suppose  the  fair  expectation  be  of  selling 
$20,000  pei  annum.  The  estimate  for  priv.ate  and  ?toic 
expenses  of  all  kinds  $2,500,  losses  by  bad  debts  and  de- 
preciation on  goods  $500,  the  reasonable  net  profits  over 
everything — expenses  and  losses — as  the  annual  gain  to 
the  proprietor  $1,000.  Thus  making  a  sum  of  $4,000  to 
be  made  on  sales  of  $20,000.    The  cost  of  the  goods  sold 


104  Averaging  Trofits  on  a  va?-ied  Stock  of  Goods, 

would  therefore  be  $16,000,  and  it  would  require  a  gross 
profit  of  twenty-five  per  cent  to  be  marked  on  the  goods. 
How  this  profit  of  twenty-five  per  cent  is  to  be  aver- 
aged on  the  goods  will  depend  very  much  on  the  compe- 
tition.     General   principles   of   instruction   can   only   be 
given.     Such  articles  as  are  in  daily  demand  in  consider- 
able quantities,  with  small  risk  of  depreciation,  are  pro- 
perly sold  at  less  profit  than  those  in  rare  demand,  or  on 
which  the  risk  of  depreciation  is  great.     Some  very  con- 
scientious men  hold  to  the  opinion  that  a  retailer  should 
never  discriminate  in  this  way,  but  should  sell   all  kinds 
or  classes  of  goods  at  the  same  advance ;  there  being  in 
their  mind  a  species  ofdeception  in  selling  what  are  called 
leading  articles  at  less  advance,  and  making  up  the  profit 
to  the  average  by  increasing  prices  on  other  goods.  There 
appears  to  me,  however,  good  reasons  why  there  should 
be  even  large  difierences  in  the  rate  of  profit  on  the  differ- 
ent  kinds  of  goods  a  retailer  keeps,  independent  of  the 
competition  which  may  often  induce  these  different  rates. 
Goods  of  a  perishable  nature,  on  which  there  is  a  risk  of 
spoiling  or  deteriorating— those  in  which  fashion  or  style 
makes  a  large  part  of  the  value,  and  which  a  change  of 
fashion  would  make  less  valuable— those  which  are  sel- 
dom wanted,  or  wanted  for  only  a  short  season  in  the 
year,  as  the  interest  on  the  amount  of  stock  kept  in  pro- 
portion to  the  amount  annually  sold,  is  greater  than  on 
those  of  daily  sale— those  that  are  wanted  only  in  small 
quantities  at  a  time— those  in  which  there  is  much  risk  of 
breaking   or  wastmg  m  handling-and  those  which  re- 
qifire  much  time  and  trouble  m  their  purchase,  manage- 
ment in  store  and  selling,  out  of  proportion  to  their  in- 
trmsic  value— should  all  evidently  command  a  profit  be- 
yond what  articles  of  an  opposite  character  do.     And 
the  increase  should  be  fully  adequate  to  compensate  for 


J^ecessary  l^-ccaution  in  gating  Trojils,       105 

the  increased  risk,  interest,  time  employed  and  labor  in 
buying,  storing  and  sending  them. 

In  averaging  the  amount  of  profit  to  be  made  on  the 
different  kinds  of  goods,  as  above,  notice  must  be  taken 
of  the  different  proportions  that  will  probably  be  sold  of 
each  kind.  It  will  not  be  enough  that  a  stock  of  goods, 
newly  laid  in  to  start  a  business  with,  are  so  accurately 
averaged  in  the  selling  pi-ice,  that  when  all  are  sold  they 
will  have  jiist  yielded  the  twenty-five  per  cent  profit. 

If,  for  instance,  of  a  stock  of  $G,000  laid  in  for  a  busi- 
ness, 81,000  is  marked  at  an  advance  often  per  cent,  $1,000 
at  twenty  per  cent,  $2,000  at  twenty-five  per  cent,  $1,000 
at  thirty  per  cent  and  $1,000  at  forty  per  cent,  the  whole 
when  sold  will  average  twenty-five  per  cent.  But  it  is 
almost  a  certainty  that  the  first  $2,000  worth  of  goods 
sold  would  not  be  at  a  profit  of  over  twenty  per  cent. 
By  this  time,  probably,  the  stock  would  require  replen- 
ishing, mainly  in  the  goods  paying  ten  per  cent  profit. 
So  that  the  next  $2,000  sold  out  again  would  only  yield 
twenty  per  cent  profit.  And  this  would  be  continued  the 
year  through,  and  the  retailer  would  find  when  the  year 
came  round  and  he  took  account  of  his  stock,  that  for 
some  unaccountable  reason  liis  profits  were  not  forth- 
coming. 

This  is  a  very  essential  matter  to  keep  in  mind,  and  be 
well  understood.  Losses  in  this  way  oftenest  occur  with 
those  who  undertake  to  sell  leading  articles  at  very  little 
profit.  These  are  the  goods  they  sell  most  of,  and 
which  need  most  frequent  replenishing.  It  is  a  difficulty 
which  is  very  apt  to  overtake  young  beginners.  With  a 
desire  to  make  some  excitement  when  they  first  open, 
they  put  down  the  prices  of  their  leading  articles,  below 
the  prices  curient  atnong  their  neighbors.  They  think  to 
make  up  for  this  by  greater  economy  in  expenses,  but 


-"-r 


■  - 


' 


106 


Testing  jiyerage  of'  ^^ofit  on  Sales, 


soon  find  that  to  sustain  themselves  they  must  make  a 
fair  average  profit,  and  so  they  put  an  extra  price  on  such 
goods  as  are  not  of  so  frequent  sale. 

This  may  Avork  for  a  while,  perhaps  for  a  year,  and  the 
success  of  the  year's  business  seems  to  warrant  a  continu- 
ance of  the  method.  But  by  and  by  the  customers  find  out 
that  that  house  is  a  good  one  only  to  buy  leading  articles 
in,  which  they  get  there,  but  as  they  want  other  things 
they  go  back  to  the  old  places.  So  that  the  second  year 
the  dealer's  business  is  mainly  in  these  leading  articles 
which  he  has  been  selling  without  adequate  profit,  and 
the  result  of  the  year's  business  is  a  loss. 

An  excellent  proof  of  the  sufficiency  of  the  profits  is 
to  make  an  occasional  day's  record  of  them  on  all 
the  goods  sold,  say  once  a  month.  This  test  will  show 
the  proportions  of  the  sale  of  each  kind  of  goods,  or 
rather,  perhaps,  the  average  of  all  the  kinds.  To  be  of 
any  value  the  account  should  be  taken  carefully,  which  it 
may  easily  be,  by  a  system  of  making  a  ticket  for  each  sale, 
on  which  is  pencilled  the  quantity  and  price  of  the  ar- 
ticles sold,  with  the  cost  mark  on  the  margin.  There  is 
no  great  difficulty  in  making  such  a  record  every  day, 
though  it  takes  some  time  to  count  up  the  profit  on  a 
day's  sale  ;  perhaps  more  than  is  profitable. 

When  such  a  periodical  account  of  profits  is  taken,  the 
proprietor  should  be  careful  that  it  is  a  fair  criterion,  as 
where  many  salesmen  are  retained,  there  arises  some- 
times a  rivalry  among  them  as  to  whose  profits  shall  be 
the  greatest  for  the  day,  and  they  make  special  efforts  to 
sell  the  goods  that  yield  the  largest  profits,  and  may  thus 
mislead  the  proprietor. 

When  the  full  cost  and  selling  price  of  the  articles  is 
settled  upon,  it  may  be  very  appropriately  noted  with  a 
pencil  on  the  original  bill  or  invoice,  on  the  margin  or 


A^fflxing  the  Trice  Mark, 


107 


line  of  the  description  of  the  article,  as  a  permanent  mem- 
orandum, then  the  article  itself  marked  before  being  laid 
away  in  its  place.  Much  of  the  neatness  of  appearance 
of  a  stock  of  goods  will  depend  upon  how  this  is  done. 
The  mark  should  be  so  permanent  that  it  will  not  readily 
be  lost  or  rubbed  off;  so  prominent  and  so  uniformly  in 
one  position  on  the  same  class  of  articles  that  it  can  be 
readily  found  by  the  proprietor  and  his  clerks  ;  so  clear 
and  definite  that  it  will  not  be  mistaken  ;  and  withal  so 
inconspicuous  that  it  does  not  readily  attract  the  notice 
of  the  buyer. 

Uniformity  of  location  and  intelligibility  or  clearness 
of  the  mark  are  very  essential.  It  looks  very  unbusiness- 
like to  see  a  salesman  when  waiting  on  a  customer,  turn- 
ing an  article  exhibited  from  side  to  side  and  end  to  end, 
searching  for  the  "mark;"  or  having  found  it,  scrutiniz- 
ing it  in  all  possible  lights  in  the  effort  to  decipher  it ;  per- 
haps calling  a  fellow  clerk  to  help  decide  whether  a  cer- 
tain figure  is  a  3  or  a  5,  or  some  equally  obscure  matter, 
while  all  this  time  the  customer  stands  or  sits  impatient 

to  depart. 

Small  articles,  which  when  examined  by  the  customer 
mutJt  necessarily  be  taken  from  the  box  or  package  in 
which  they  are  kept,  and  which  are  thence  liable  to  be 
mistaken  for  others  of  a  different  price,  should  each  be  sep- 
arately marked.  This  can  easily  be  done  by  attaching  a 
gum  ticket,  or  sewing  on  (if  the  article  admits  of  it)  a 
small  card  or  tag,  on  which  the  mark  is  written ;  and 
which  uniformly  placed  in  one  position  will  be  readiJy 
found,  and  will  not  be  injurious  to  the  goods,  as  marks 
made  directly  on  them  sometimes  are. 

It  facilitates  the  dispatch  of  business,  also,  to  have  the 
papers  or  boxes  in  which  such  goods  are  kept  so  marked 
on  the  end  exposed  to  view,  with  the  name  of  the  article 


108 


^jsepinff  the  Goods  in  Order, 


and  the  cost  and  selling  price,  that  the  character  of  the 
contents  may  be  readily  known,  and  so  that  in  case  all  the 
articles  get  taken  out  in  exhibiting  them,  each  kind  may 
readily  be  returned  to  the  proper  receptacle.  Every  box 
or  package  has  its  peculiar  ear  mark  to  the  attentive  sales- 
man, by  which  in  part  he  recognizes  it  and  knows  its 
contents,  and  any  carelessness  in  unnecessarily  changing 
them  will  tend  to  confusion. 

In  attaching  tags  for  the  reception  of  the  price  mark 
on  goods  that  come  in  pairs,  like  gloves,  hosiery,  suspen- 
ders, etc.,  advantage  can  be  taken  of  the  opportunity  to 
Btitch  the  pairs  more  firmly  together  in  sewing  the  tag 
on,  so  that  they  will  withstand  the  ordinary  handling  to 
which  they  are  exposed  when  offered  for  sale.  This  sub- 
ject, however,  brings  us  to  the  other  branch  of  this  chap- 
ter— arranging  the  goods  in  the  store-room  for  sale. 

It  will  be  impossible  within  the  limits  that  should  be 
appropriated  to  this  subject,  to  give  all  the  minute  de- 
tails of  the  various  things  to  be  done  in  arranging  and 
placing  in  proper  selling  condition  an  ordinary  stock  of 
dry  goods,  much  less  the  details  of  other  kinds  of  busi- 
ness, even  if  the  writer  was  suflficiently  well  acquainted 
with  them  to  do  it.  The  most  he  can  undertake  to  do  will 
be  to  mention  some  of  the  evil  results  following  from 
a  neglect  of  this  duty,  and  direct  the  reader  in  the  man- 
agement of  a  few  articles,  as  illustrations  of  the  general 
arrano^ement. 

During  a  period  of  twenty-five  years'  experience  in 
business,  it  has  frequently  been  the  author's  duty  to  in- 
vestigate the  affairs  of  bankrupt  retailers,  and  to  examine 
thoroughly  their  stocks  of  goods.  Almost  invariably  has 
he  found  such  stocks  in  disorder.  Frequently  one-eighth 
to  one-fourth  of  the  goods  without  any  mark  on  to  indi- 


Order  Expedites  business. 


109 


cate  the  cost  or  selling  price,  and  the  proprietor  under 
the  necessity  of  asking  the  clerks,  and  the  clerks  "  guess- 
ing "  that  it  is  so  much.  The  goods  exposed  that  should 
have  been  protected  in  wrappers  or  drawers,  and  soiled 
or  faded,  and  on  that  account  of  nominal  value.  Hosiery 
and  such  lite  articles  as  come  in  pairs,  separated,  and 
many  unmatched.  No  place  for  anything,  and  appar- 
ently everything  out  of  place.  So  universally  has  that 
been  the  case,  that  disorders  of  this  kind  in  business  are 
now  naturally  coupled  with  unthriftiness,  if  not  with  ac- 
tual insolvency. 

Order  in  the  arrangement  of  goods  for  sale  in  a  store- 
room, is  of  quite  as  much  consequence  to  the  profitable 
prosecution  of  the  businsss— though  the  casual  reader 
may  not  think  so— as  it  is  to  the  manufacturer  or  agri- 
culturist. A  customer  that  is  detained  waiting  while  the 
salesman  hunts  for  some  particular  piece  of  goods  which 
is  misplaced,  or  for  a  mate  to  a  glove  or  stocking  which 
he  or  she  has  selected,  is  not  likely  to  have  a  high  opinion 
of  the  business  qualifications  of  the  proprietor  of  the  es- 
tablishment, and  therefore  has  not  much  reliance  on  his 
ability  to  sell  his  goods  cheap,  or  confidence  in  his  taste 
or  judgment.  When  such  opinions  become  general  among 
a  dealer's  customers,  his  prestige  is  gone,  and  he  might 

as  well  shut  up  shop. 

As  to  the  details  of  arrangement— referring  to  the  pre- 
ceding remarks  about  firmly  connecting  all  articles  that 
are  sold  in  pairs  or  sets,  I  would  mention  the  advantage 
of  having  folded  goods,  as  cloths  and  many  kinds  of  dress 
goods,  rolled  on  boards.  Within  the  last  few  years  many 
kinds  of  goods  are  put  up  in  this  form  by  the  manufac- 
turer, though  some  still  come  folded,  but  they  are  more 
conveniently  handled  and  shown,  and  more  easily  pro- 
tected from  damage  when  rolled  on  boards.   Small  covers 

10 


108 


keeping  the  Goods  in  Order, 


and  the  cost  and  selling  price,  that  the  character  of  the 
contents  may  be  readily  known,  and  so  that  in  case  all  the 
articles  get  taken  out  in  exhibiting  them,  each  kind  may 
readily  be  returned  to  the  proper  receptacle.  Every  box 
or  package  has  its  peculiar  ear  mark  to  the  attentive  sales- 
man, by  which  in  part  he  recognizes  it  and  knows  its 
contents,  and  any  carelessness  in  unnecessarily  changin<y 
them  will  tend  to  confusion. 

In  attaching  tags  for  the  reception  of  the  price  mark 
on  goods  that  come  in  pairs,  like  gloves,  hosiery,  suspen- 
ders, etc.,  advantage  can  be  taken  of  the  opportunity  to 
stitch  the  pairs  more  firmly  together  in  sewing  the  tag 
on,  so  that  they  will  withstand  the  ordinary  handlino"  to 
which  they  are  exposed  when  offered  for  sale.  This  sub- 
ject, however,  brings  us  to  the  other  branch  of  this  chap- 
ter— arranging  the  goods  in  the  store-room  for  sale. 

It  will  be  impossible  within  the  limits  that  should  be 
appropriated  to  this  subject,  to  give  all  the  minute  de- 
tails of  the  various  things  to  be  done  in  arranging  and 
placing  in  proper  selling  condition  an  ordinary  stock  of 
dry  goods,  much  less  the  details  of  other  kinds  of  busi- 
ness, even  if  the  writer  was  suflSciently  well  acquainted 
with  them  to  do  it.  The  most  he  can  undertake  to  do  will 
be  to  mention  some  of  the  evil  results  following  from 
a  neglect  of  this  duty,  and  direct  the  reader  in  the  man- 
agement of  a  few  articles,  as  illustrations  of  the  general 
arrangement. 

During  a  period  of  twenty-five  years'  experience  in 
business,  it  has  frequently  been  the  author's  duty  to  in- 
vestigate the  affairs  of  bankrupt  retailers,  and  to  examine 
thoroughly  their  stocks  of  goods.  Almost  invariably  has 
he  found  such  stocks  in  disorder.  Frequently  one-eighth 
to  one-fourth  of  the  goods  without  any  mark  on  to  indi- 


Order  £^xpedltes  ^Business, 


109 


cate  the  cost  or  selling  price,  and  the  proprietor  under 
the  necessity  of  asking  the  clerks,  and  the  clerks  **  guess- 
ing "  that  it  is  so  much.  The  goods  exposed  that  should 
have  been  protected  in  wrappers  or  drawers,  and  soiled 
or  faded,  and  on  that  account  of  nominal  value.  Hosiery 
and  such  lite  articles  as  come  in  pairs,  separated,  and 
many  unmatched.  No  place  for  anything,  and  appar- 
ently everything  out  of  place.  So  universally  has  that 
been  the  case,  that  disorders  of  this  kind  in  business  are 
now  naturally  coupled  with  unthriftiness,  if  not  with  ac- 
tual insolvency. 

Order  in  the  arrangement  of  goods  for  sale  in  a  store- 
room, is  of  quite  as  much  consequence  to  the  profitable 
prosecution  of  the  businsss — though  the  casual  reader 
may  not  think  so — as  it  is  to  the  manufacturer  or  agri- 
culturist. A  customer  that  is  detained  waiting  while  the 
salesman  hunts  for  some  particular  piece  of  goods  which 
is  misplaced,  or  for  a  mate  to  a  glove  or  stocking  which 
he  or  she  has  selected,  is  not  likely  to  have  a  high  opinion 
of  the  business  qualifications  of  the  proprietor  of  the  es- 
tablishment, and  therefore  has  not  much  reliance  on  his 
ability  to  sell  his  goods  cheap,  or  confidence  in  his  taste 
or  judgment.  When  such  opinions  become  general  among 
a  dealer's  customers,  his  prestige  is  gone,  and  he  might 
as  well  shut  up  shop. 

As  to  the  details  of  arrangement — referring  to  the  pre- 
ceding remarks  about  firmly  connecting  all  articles  that 
are  sold  in  pairs  or  sets,  I  would  mention  the  advantage 
of  having  folded  goods,  as  cloths  and  many  kinds  of  dress 
goods,  rolled  on  boards.  Within  the  last  few  years  many 
kinds  of  goods  are  put  up  in  this  form  by  the  manufac- 
turer, though  some  still  come  folded,  but  they  are  more 
conveniently  handled  and  shown,  and  more  easily  pro- 
tected from  damage  when  rolled  on  boards.   Small  covers 

10 


110 


Advantage  of  Sample  Cards, 


of  holland  or  muslin  with  tape  strings,  to  cover  such  as 
are  peculiarly  liable  to  injury  by  exposure,  are  valuable. 
Buttons,  and  other  similar  articles  that  come  sewed  on 
cards,  which  when  cut  the  threads  loosen  and  the  articles 
drop  off  and  are  lost,  are  readily  retained  by  taking  a 
piece  of  common  wrapping  paper,  gumming  it  well  on 
one  side,  and  pressing  it  down  tightly  on  the  back  of  the 
card.     It  adheres  to  the  threads  at  all  points,  and  the 
card  can  be  cut  in  any  way  necessary  without  loosing  the 
threads.     Colored  sewing  silks,  braids  and  other  such 
articles  liable  to  be  entangled,  should  be  assorted,  and 
each  color  rolled  up  separately  in  a  piece  of  paper,  leav- 
ing a  small  part  of  the  end  of  the  skein  to  show.    The 
precise  shade  may  thus  be  selected  to  match  any  color, 
and  only  the  roll  opened  that  is  required.     Sample  cards 
often  much  facilitate  the  transaction  of  business.     A  cus- 
tomer can  select  from  a  dozen  styles  of  goods  on  a  sam- 
ple card  much  more  readily  than  from  a  dozen  separate 
parcels.     Many  goods  can  be  more  readily  shown  that 
way,  especially  such  as  are  kept  tied  up,  without  the  de- 
lay of  opening  all  of  them.     Those  only  needing  to  be 
opened  which  seem  nearest  to  suiting  the  customer.    I 
have  sometimes  seen  a  customer  leave  a  retail  store,  tired 
of  waiting  while  some  slow  moving  clerk  was  engaged  in 
getting  down  from  a  top  shelf  and  untying  some  article 
she  had  asked  for,  when  with  a  sample  card  it  might  have 
been  shown  in  a  second. 

In  this  fast  age  time  is  money,  if  it  never  was  before, 
and  a  retailer  should  know  that  the  sooner  he  can  place  any 
article  asked  for,  before  the  customer,  the  greater  is  his 
chance  of  effecting  a  sale.  Such  sample  cards,  if  left  in 
a  conspicuous  place,  also  frequently  serve  to  remind  a 
customer  of  some  article  they  want  which  would  other- 
wise have  been  forgotten.    When  they  are  made  up  of 


Goods  Quickly  ShoM^ti  by  Them* 


111 


i 

t 

H 


hosiery  and  such  articles,  they  should  be  sold  off  frequently 
and  replaced  by  fresh  goods,  as  soiled  or  tarnished  sam- 
ples are  worse  than  none.  Goods  should  never  be  packed 
away,  as  out  of  season,  without  retaining  full  and  ample 
samples  of  them  with  quantity  and  price,  so  that  they 
may  be  referred  to  quickly  if  unexpectedly  a  call  is 
made  for  them  out  of  season.  Many  times  goods  are 
wanted  to  exactly  match  in  color ;  and  the  salesman  is 
expected  to  take  just  as  much  interest  in  trying  to  suit, 
though  it  may  be  only  a  trifling  quantity  that  is  wanted, 
as  if  he  expected  to  make  a  large  sale.  Though  he  may 
know  from  his  recollection  that  he  has  nothing  that  will 
match  the  color  of  the  sample,  if  he  simply  says^  so,  and 
turns  to  serve  some  other  customer,  his  inability  to  match 
the  sample  is  regarded  rather  as  an  unwillingness  to  give 
himself  the  trouble  to  look,  and  himself  and  the  store  in- 
cur the  odium  of  being  disobliging.  This  imputation 
could  easily  be  avoided  by  the  possession  of  a  sam- 
ple card,  which  would  contain  all  the  colors  of  the  goods 
of  that  character.  Its  production,  with  the  pertinent  re- 
mark that  he  did  not  believe  he  could  furnish  the  color, 
and  giving  the  customer  the  opportunity  of  also  seeing 
that  there  is  nothing  to  match  it,  would  be  perfectly 
satisfactory.  Another  profit  of  them,  is  the  ability  to 
show  with  equal  advantage,  styles  of  goods  which  are  a 
little  old  fashioned.  These  less  desirable  styles,  being  all 
on  the  same  card  with  the  newer  styles,  will  frequently 
attract  the  notice  of  the  customer,  who  for  the  purpose  or 
use  she  intends  making  of  them,  would  prefer  them  to  the 
newer  patterns.  Whereas  had  the  same  goods  been  shown 
in  bulk,  it  would  only  be  after  the  others  did  not  seem  to 
be  satisfactory ;  and  even  then,  with  some  disparaging  re- 
mark, as  "  here  is  an  older  style,"  or  "  a  style  w^hich  has 
not  been  so  desirable,  I  do  not  know  whether  it  will  suit 


I 


112     ^^^Pinff  Memorandums  of  Surplus  Stocl% 

you :»  endeavoring  by  such  remarks  to  palliate  the  force 
of  objections  which  customers  frequently  make  to  bein^ 
shown  antiquated  or  inferior  goods.  Such  language  is  of 
Itself  sufficient  to,  and  generally  does  condemn  the  goods 
in  the  eyes  of  the  customer,  though  if  shown  in  connec 

r  r\  I  '"  '  '"™P^'  '^''^^  ^^^y  ^^oht  have  been 

selected  in  preference  to  the  newer  styles. 

The  last  use  of  such  sample  cards  I  will  speak  of,  is 
their  convenience  for  keeping  memorandums  on  of  the 
quantities  of  the  goods  which  may  be  in  reserve.     When 
quantities  are  bought  at  one  time,  all  of  one  kind  of  goods 
such  as  buttons,  hosiery,  etc.,  some  memorandum  is  es! 
sential  to  keep  the  run  of  what  is  not  brought  forward  on 
sale.     And  as  they  are  brought  on  sale  from  time  to  time 
this  memorandum  should  be  altered.     By  this  means,  the 
proprietor,  on  looking  at  the  sample  cards,  can  tell  how 
many  dozen  or  gross  of  each  article  is  in  reserve 

In  the  absence  of  such  memorandums  in  some  form, 
It  will  frequently  occur  that  the  package  on  sale  of  a  style 
of  goods  IS  sold  out,  and  it  is  not  convenient  at  the  mo- 
ment to  get  another  from  the  reserved  stock  ;  afterwards 
It  IS  forgotten,  and  days  and  weeks  pass  by,  before  it  is 
brought  to  light  by  a  general  revision  of  the  stock  ;  and 
when,  perhaps,  the  season  has  nearly  gone  by  for  the  sale 
ot  It;  and  there  is  m  the  end  a  loss  on  the  article,  thou<.h 
a    hands  concur  in  saying,  it  was  just  what  they  wanted 
all  the  season  but  they  thought  there  was  no  more  of  it 
to  be  had      A  sample  card  on  which  a  proper  memoran- 
dum  has  been  kept,  would  have  been  a  constant  reminder 
aud  It  would  be  known  that  there  was  yet  some  of  it  in 
the  reserved  stock. 

By  these  lengthy  remarks  upon  the  advantages  of  sam- 
pie  cards  in  a  retailer's  business,  I  do  not  wish  to  be  un- 
derstood  as  advising  that  all  goods  should  be  sold  by  sam- 


^  Ttacefor  j^very  2hing,  |X3 

pie  only,  which  can  appropriately  or  conveniently  be  so  ex- 
hibited, but  to  show  the  advantage  of  such  an  auxiUiary 
to  making  sales  from  the  parcel  or  piece  itself. 

When  the  goods  are  so  arranged  as  to  be  readily  shown 
to  the  customers,  and  so  protected  as  not  to  be  easily  liable 
to  damage  from  exposure  to  dust  and  light,  it  will  be  neces- 
sary to  select  special  locations  in  the  store-room  for  each 
separate  kind  of  goods,  so  that  so  far  as  possible  there 
shall  be  a  place  for  every  thing ;  which  location  being  once 
established,  the  articles  should  be  so  uniformly  kept  there 
that  those  familiar  with  the  store-room  could  find  them 
in  the  dark,  if  necessary. 

This  arrangement  has  ordinarily  in  view  only  the  bring- 
mg  of  such  articles  together  in  convenient  proximity, 
as  are  likely  to  be  sold  in  connection  with  each  other,' 
and  placing  those  most  frequently  in  demand  in  the  most 
prominent  positions.  Very  often  the  size  of  the  apertures 
m  the  shelves  is  allowed  to  govern  the  greater  part  of 
this  arrangement.  The  carpenter  made  the  "  round  holes  " 
and  the  ^^ round  pegs"  are  put  in  them,  and  in  another 
place  he  made  the  "  square  holes  "  and  the  "  square  pegs" 
are  put  there. 

But  there  are  many  kinds  of  goods  that  require  to  l)e 
so  placed,  that  when  shown,  they  shall  be  in  the  right 
light  to  appear  well  to  the  customers.  To  attain  to  the 
knowledge  of  what  is  a  proper  light,  practical  experiment 
IS  the  only  guide.  Wherever  the  goods  look  best  in  the 
store-room,  that  is  the  location  for  them.  The  circum- 
stances of  each  locality  are  different,  it  being  hardly 
possible  to  find  two  store-rooms  lighted  exactly  alike, 
with  just  the  same  character  of  surrounding  objects  to  re- 
flect the  light  into  the  interior.  Consequently  only  gen- 
eral  principles  can  be  stated. 


114  The  :Best  Ziffhi  to  Show  Goods  in. 

The  general  rule  is,  if  the  light  is  clear-not  reflected 
from  brick  walls  or  glaring  white  houses,  fences  or  awn- 
ings-the  more  you  can  have  of  it  up  to  a  certain  point  the 
better,  but  not  the  direct  rays  of  the  sun.     The  point  to 
go  to  IS  just  short  of  where   the  defects  in  the  goods  be- 
gm  to  show,  and  therefore,  the  more  perfect  the  goods 
are,  and  the  clearer  their   colors,  the  stronger  can  the 
hght  be.     As  the  goods  are  less  perfect  in  fabric  and  color 
the  light  must  be  modified.     A  northern  side  light  free 
from  reflected  rays  of  the  sun,  is  regarded  as  the' best 
for  most  dry  goods.     This  is  especially  a  good  li^ht  for 
any  goods  in  which  a  fine  lustre  or  gloss  is  essential  to 
the  value.     A  skylight  is  a  good  light  to  show  bright 
colors  under,  but  the  direct  rays  of  the  sun  must  be  shut 
out.     Such  a  light,  however,   brings  out  very  distinctly 
any  imperfections  of  manufacture,  unless  much  subdued 
by  a  shade. 

Artists  thoroughly  appreciate  the  value  of  light  and  its 
varying  influences  on  the  beauty  of  the  colors  in  a  paint- 
ing,  as  well  as  on  the  general  effect  of  the  painting.  Its 
influence  is  as  great  in  enhancing  the  beauty  of  many  of 
the  articles  on  a  retailer's  counter. 

A  store-room  that  receives  its  principal  light  from  win- 
dows  on  which  the  sun  does  not  shine  at  midday,  and 
through  which  windows  in  the  meanwhile  no  glaring  or 
unpleasant  reflections  of  light  are  thrown  into  the  room 
IS  considered  the  best  to  retail  dry  goods  in,  and  such 
should  be  obtained  if  possible. 

As  it  is  not  always  possible  to  have  a  store-room  li^rht- 
ed  just  as  would  be  best,  something  can  be  done  to  mod- 
ify  the  disadvantage  of  inferior  lights.  In  modifying  a 
light  It  18  desirable  to  have  an  abundance  of  it.  It  is  111 
most  impossible  to  make  any  pleasant  modification  of  the 
light  m  a  dark  and  gloomy  wareroom.     Coloring  red 


M'odifj'lng  an  Inferlo?"  I,iff?it, 


115 


brick  walls  or  board  fences  which  reflect  an  unpleasant 
tone  of  color,  with  some  neutral  wash  of  stone  or  bluish 
lead  color,  not  too  dark,  where  the  same  can  be  done,  is 
of  great  benefit ;  when  this  can  not  be  done,  a  shade  at 
the  top  or  bottom  of  the  window  to  shut  out  part  of  the 
reflected  light,  may  be  adopted.  These  shades  may  be  of 
such  color  as  is  found  to  harmonize  best  by  actual  experi- 
ment. Light  blue  shades  generally  produce  a  cooling 
efl*ect,  while  those  of  buff*  or  of  a  yellowish  tinge  im- 
part a  warmer  tone  and  give  a  sunshiny  appearance  to 
the  interior.  Such  shades,  whether  at  side  windows  or 
under  a  skylight,  should  be  so  hung  as  to  be  readily  open- 
ed to  full  length,  or  closed  entirely  as  the  clearness  or  ob- 
scurity of  the  day  may  require.  They  frequently  need  ad- 
justing three  or  four  times  during  the  day.  But  there 
should  never  be  an  attempt  at  an  adjustment  of  them  while 
goods  are  being  shown  to  a  customer,  as  doing  so  gives 
rise  to  a  suspicion  that  the  goods  will  not  bear  the  light ; 
though  no  suspicion  can  be  aroused  by  drawing  up  a  shade 
so  as  to  give  more  light  on  the  goods,  at  any  period  while 
exhibiting  them. 

The  subject  of  the  best  light  in  a  wareroom,  in  which 
to  exhibit  certain  goods,  is  always  a  matter  for  observa- 
tion, study  and  experiment  to  the  retailer.  It  changes 
and  varies  with  the  changing  seasons,  and  is  different  at 
morning,  midday  and  afternoon.  The  introduction  of 
new  shades  of  colors,  and  new  fabrics  also,  may  require 
experiment  to  show  where  they  can  be  exhibited  to  the 
best  advantage.  If  the  proprietor  takes  the  position  of  a 
customer  looking  at  the  article,  he  can  soon  learn  which 
locations  are  the  best  and  which  to  avoid. 

Retailers  sometimes  err  in  endeavoring  to  modify  the 
light  of  their  warerooms  by  shutting  too  much  of  it  out, 
and  making  their  places  too  dark.    This  is  even  a  greater 


116 


Inftiience  of  Affreeahle  Zights, 


injury  than  too  much  light.     It  is  not  the  absence  of  light 
they  need,  but  the  absence  of  unpleasantly  reflected  light. 
The  colors  of  most  goods  require  a  considerable  portion 
of  light  to  display  their  tints  to  the  best  advantage,  and 
when  the  wareroom  is  shrouded  in  gloom,  the  customer 
has  either  to  purchase  the  goods  half  unseen,  or  to  hold 
them  up  to  the  light  of  a  window  or  door  to  perceive  the 
quality  and  shade  of  color.     The  latter  course  is  gener- 
ally adopted,  and  thus  all  the  advantage  which  was  anti- 
cipated by  darkening  the  store,  is  more  than  lost,  as  the 
goods  are  seen  in  one  of  the  worst  lights  they  could  have 
been  shown  in.     Besides,  in  the  course  of  business,  no- 
thing is  made  by  deceiving  a  customer  with  goods  which 
will  not  bear  the  light. 

Almost  every  person  is  susceptible  to  the  genial  influ- 
ences of  a  cheerful  and  harmonious  light  in  a  room,  store- 
house, church  or  other  place,  which  they  may  be  in,  while 
a  sombre  or  a  glaring  and  inharmonious  light  distracts 
the  mind  and  oppresses  the  eyes,  and  we  do  not  readily  find 
ourselves  pleased  with  any  thing  while  in  its  presence. 
A  shrewd  retailer  will  recognize  these  influences,  and  try 
to  so  regulate  the  light  in  his  store-room  as  to  make  an 
agreeable  impression  on  his  customers. 

In  concluding  this  chapter,  I  might  say  that  there  are 
a  great  many  little  matters  of  the  kind  mentioned  herein 
—as  the  vendue  handbills  say—"  too  tedious  to  mention," 
which  it  is  very  desirable  that  the  retailer  should  under- 
stand. Every  branch  of  business  has  those  peculiar  to 
itself  They  embrace  what  may  be  called  the  drudgeiy 
of  the  business,  and  though  their  general  character  is  the 
same  in  all  trade,  they  are  as  varying,  in  the  details  as  the 
goods  themselves.  Some  articles  require  to  be  kept  in  an 
upper  room,  or  other  dry  place ;  others  in  a  cellar,  or 
where  it  is  damp;  some  must  be  kept  closely  shut  up 


Supplying  a  Z,ack  of  business  Training,    117 

from  the  air;  others  freely  exposed  to  it.  Some  must 
not  be  too  warm ;  others  not  too  cold.  It  is  not  always 
that  what  may  be  called  actual  damage  occurs  by  inat- 
tention to  these  matters,  but  the  articles  lose  in  appear- 
ance and  finish ;  though  oftentimes  actual  damage  is  sus- 
tained by  neglecting  such  labors.  And  the  reader's  at- 
tention will  be  further  drawn  to  this  view  of  the  subject 
in  a  subsequent  chapter  concerning  losses  in  business. 

It  may  be  said  that  the  experience  of  a  few  years  will 
generally  teach  an  observing  and  careful  man  what  is 
necessary ;  though  if  the  beginner  has  not  had  the  advan- 
tages of  a  training  in  a  well  conducted  establishment,  it 
is  worth  the  trouble  and  expense  to  get  a  clerk  who  is 
acquainted  with  all  such  details,  and  from  him  leani  the 
methods  to  facilitate  business  which  are  approved  of  by 
the  experience  of  other  well  appointed  houses.  He  may 
have  to  pay  liberally  for  such  a  clerk,  but  the  engagement 
need  not  necessarily  be  a  lengthy  one.  One  year  ought 
to  be  sufficient,  and  care  should  be  taken  in  his  employ- 
ment, not  only  that  he  is  experienced,  but  that  his  ex- 
perience is  of  the  right  kind. 


CHAPTER   VII. 

ON  ADVERTISING   A   BUSINESS. 

THE  extent  to  which  a  business  may  be  profitably 
published  to  the  community  by  means  of  newspapef  ad- 
vertisements, circulars,  handbills,  etc.,  is  a  matter  which 
has  for  many  years  received  much  attention  and  consid- 
eration, and  about  which  their  yet  remains  some  diversity 
of  opinion. 

While  it  is  patent  to  most  people  who  have  any  busi- 
ness experience,  that  immense  fortunes  have  been  made 
solely  through  advertising  some  special  article,  by  reason 
of  which  it  had  a  sale  far  beyond  what  it  would  other- 
wise have  had,  it  is  to  other  persons  equally  well  known 
that  very  large  sums  have  been  expended  by  scores  of 
dealers,  trading  in  equally  meritorious  articles,  without 
any  adequate  return  for  the  outlay. 

I  confess  that  my  own  experience  in  this  matter  has  not 
given  me  sufficient  wisdom  to  lay  down  specific  rules  which 
should  govern  in  every  particular  case,  or  which  a  retailer 
ought  to  adopt  in  so  important  a  matter,  under  all  cir- 
cumstances. I  shall  only  give  some  general  conclusions, 
which  I  have  arrived  at  from  my  own  experience,  and 
from  observation  of  the  practices  of  others. 

One  conclusion  is,  that  though  general  and  indiscrimi- 
nate advertising  may  succeed  in  cases  of  special  articles 
which  are  patented,  and  competitors  can  not  come  in  and 
reap  a  portion  of  the  advantages  attained  by  the  adver- 
tising, yet  for  articles  of  ordinary  traffic,  where,  when  a 
trade  has  been  obtained,  others  may  compete  with  the 


^Advertising  £Jxclusive  Articles, 


119 


advertiser  for  the  profits,  it  is  an  expenditure  which  re- 
quires as  much  consideration  as  the  location  of  the  place 

of  business. 

Much  lies  in  the  character  of  the  article  itself  which  is 
to  be  advertised.  If  it  is  the  production  of  the  adver- 
tiser, it  is  to  a  certain  degree,  even  though  not  a  patented 
article,  exclusive  to  him.  For  though  others  may  make 
just  as  good  an  article,  they  cannot  use  the  advertiser's 
name  and  trade  mark  to  sell  their  own  manufacture.  Or 
if  the  article  advertised  is  of  such  variable  and  undeter- 
mined value  that  it  is  difficult  to  make  comparisons  of 
prices  and  qualities,  such  as  ready  made  clothing,  boots 
and  shoes,  etc.,  a  sort  of  confined  advantage  can  be  ob- 
tained of  the  advertising,  sufficiently  great  to  warrant 

some  outlay. 

Again,  even  of  these  exclusive  articles,  something 
must  be  considered  as  to  whether  the  article  is  so  well 
and  peculiarly  adapted  to  supply  a  want  in  the  commu- 
nity as  that,  when  once  introduced  to  notice,  it  will  con- 
tinue to  be  used  in  preference  to  other  articles  which  it 
may  supplant  temporarily ;  or  if  the  demand  which  it  is 
intended  to  supply,  is  one  common  to  a  very  large  por- 
tion .  of  the  community,  so  that  those  who  will  buy  the 
article  only  once  to  try  it,  make  themselves  a  large  trade 
for  it ;  or  if  the  person  advertising  has  superior  advan- 
tages in  the  production  or  purchase  of  the  article,  beyond 
what  his  competitors  could  have.  In  either  case,  if  the 
profits,  either  present  or  prospective,  on  the  article  are 
sufficient  to  warrant  the  expense  which  will  be  incurred 
by  a  system  of  extensive  advertising,  the  circumstances 
are  such  as  will  warrant  a  judicious  outlay  of  money  in 
disseminating  the  information  of  these  facts  among  such 
as  would  be  customers,  either  by  newspaper  advertise- 
ments, handbills,  circulars,  or  all  combined,  as  may  seem 


120 


Impolicy  of  Deceph'on. 


best  fitted  to  reach,  that  portion  of  the  community  to  whom 
he  looks  for  patronage.  And  if  his  goods  have  none  of 
these  special  qualities,  he  will  save  his  money  and  often 
his  reputation  by  refraining  from  advertising. 

Ordinarily  a  retailer  of  common  and  staple  articles  can 
not  justly  claim  any  great  advantage  over  his  competi- 
tors, in  the  prices  or  qualities  of  goods  he  offers,  beyond 
What  may  lie  in  a  larger  capital,  superior  business  capa- 
city, some  especial  business  connection  whereby  he  ob- 
tains  advantages  in  purchasing,  or  greater  economy  in 
living  and  store  expenses,  and  either  or  all  of  these  ad- 
vantages   are   proper  matters  to  publish.     But  when  a 
dealer  has  none  of  these  advantages,  and  unjustly  claims 
them   in   advertising,   the    result   is    often    injurious   to 
his  business,  particularly  in  local  or  limited  communities 
wherein  mainly  the  retailer  trades.     For  so  soon  as  a  few 
members  of  the  community  ascertain  the  falsity  of  the 
statements  he  advertises,  which  thev  generally  soon  do, 
instead  of  furthering  the  ends  of  the  retailer  by  spread- 
ing the  lie,   or  even  by  silence,  they  rather  endeavor  to 
thwart   his   trickery   by  telling  the  truth,  and  wai-nin<r 
their  associates,  frequently  regarding  it  as  an  act  of  jus°- 
tice  to  go  out  of  their  way  to  do  it.     So  that  in  the  end 
the  dealer  sometimes  does  not  get  credit  for  the  advan- 
tages  he  really  may  possess. 

Independent  of  the  foregoing  considerations,  it  will  be 
found  advantageous  to  make  some  publication  when  a 
business  is  newly  commenced,  or  upon  the  occurrence  of 
any  notable  event,  as  an  arrival  of  a  renewed  supply  of 
articles  suited  to  the  coming  season  or  period,  the  receipt 
of  some  special  article  which  has  been  scarce  and  in  de- 
mand, or  a  general  reduction  in  the  price  of  many  articles 
as  sometimes  occurs  towards  the  close  of  a  season. 
The  method  adopted  to  give  publicity  must  also  be  va- 


Extent  of  Publicity, 


121 


ried  to  correspond  with  the  different  circumstances  or 
conditions  of  the  business,  and  also  the  extent  of  the  pub- 
licity. As  the  two  subjects  are  intimately  connected  and 
involved,  they  may  be  treated  of  together. 

It  should  be  sufficiently  extensive  to  bring  the  informa- 
tion to  the  notice  of  all  those  likely  to  be  customers,  and 
as  a  general  rule,  it  is  better  too  much  than  too  little. 
Meaning  thereby  that  it  will  be  better  that  three-fourths 
of  the  community  of  purchasers  obtain  the  information  a 
dozen  times,  if  necessary,  while  bringing  it  once  to  the 
notice  of  the  other  fourth.     One  person  reads  the  news- 
papers daily,  and  regularly  notices  among  the  events  of 
the  day  the  new  advertisements.    Another  looks  only  oc- 
casionally— perhaps  once  a  week — over  the    advertise- 
ments.   The  latter  class  must  be  provided  for  by  a  con- 
tinuance  of  the   advertisement  as  well  as  the  former. 
While  there  is  still  another,  and  a  large  class,  who  sel- 
dom read  the  advertisements  in  a  newspaper,  and  this 
class  must  be  reached  in  some  other  way.    If  they  are 
males  to  whose  notice  the  information  is  to  be  brought, 
the  handbill  is  a  ready  method  ;  if  females  the  circular. 
Often  both  can  be  appropriately  used.     In  some  localities 
these  latter  methods  are  more  economical  and  more  di- 
rect than  newspaper  advertisements  to  spread  informa- 
tion among  the  limited  community  which  a  retailer  has 
for  his   customers :  in  particular,  small  villages  without 
a  local  paper,  in  the  vicinity  of  a  large  city,  where  the 
villagers   rely  on  the  newspapers  of  the  city  for  their 
daily  news.    Advertisements  in  such  papers  w^ould  be  ex- 
pensive in  proportion  to  the  extent  of  their  circulation 
in  the  village,  and  probably  not  the  one-thousandth  part 
of  the  circulation  would  be  of  any  advantage  to  the  ad- 
vertiser in  his  situation.    The  handbill  permanently  and 

conspicuously  posted  to  meet  the  eye  at  every  turn,  and 

11 


122 


Make  the  Truth  Attractiye, 


the  circular  letter  addressed  directly  to  the  individual, 
can  here  be  used  more  appropriately.  Indeed,  as  an 
auxiliary  to  newspaper  advertisements  they  are  always 
valuable.  A  dealer  can  display  much  taste  in  getting  up 
such  articles,  by  the  variety  of  type  and  style  which  they 
admit  of  without  increased  expense.  The  use  of  litho- 
graphy to  give  the  circular  the  fac  simile  of  a  specially 
written  letter  is  often  very  advantageous. 

Whatever  concerning  a  retailer's  business  is  published, 
either  by  newspaper  advertisements,  handbills  or  circu- 
lars, should  be  the  truth.  If  that  will  not  sei-ve,  or  it  is 
thought  that  it  will  not,  it  is  better  to  keep  silent.  What- 
ever may  be  the  current  belief  by  people  outside  of  a 
retail  business,  money  is  not  made  in  the  end  by  deceiv- 
ing those  with  whom  we  deal,  and  on  the  continuance  of 
whose  custom  we  are  to  rely. 

Much  though  depends  on  the  manner  in  which  truths 
even  are  related.  A  tame,  spiritless,  common  place 
advertisement  which  may  be  true  in  every  respect  will 
fail  to  attract  the  notice  and  be  retained  in  the  memory, 
like  one  of  an  original,  spirited  and  novel  character. 
A  business  man  may  be  known,  to  some  extent,  by  the 
style  of  his  advertisement.  If  he  merely  revamps  old 
and  stereotyped  ideas,  and  adopts  other  men's  phrases  and 
forms  of  expression,  the  probabilities  are  that  he  does  the 
same  in  his  business.  And  the  best  that  can  be  said  of 
the  goods  and  prices  of  such  a  dealer  is  that  they  are  as 
good  and  as  cheap  as  some  other  dealer's. 

Every  business  man  should  endeavor,  in  the  form  and 
method  of  his  advertising,  as  well  as  in  the  transactions 
of  his  business,  to  improve  upon  what  he  sees  around  him ; 
to  originate  new  ideas  and  new  methods,  and  not  be  con- 
tent to  servilely  copy  even  the  most  intelligent  and  pros- 
perous of  his  competitors. 


Strike  Out  JVew  Taths. 


123 


In  this  way  only  can  he  be  a  whole  and  complete  mer- 
chant, whose  business  fundamentally  is  to  strike  out  new 
paths  and  new  ventures.  In  this  Tray  only  can  he  hope 
to  reach  the  end  at  which  he  aims.  The  well-trodden 
ways  of  business  are  always  full  of  a  satisfied  multitude, 
or  if  not  a  satisfied  an  incompetent  multitude,  plodding 
along  like  those  around  them,  with  just  enough  of  profit 
to  keep  soul  and  body  together;  often  slipping  down  in 
insolvency  and  run  over,  then  up  and  at  it  again,  till  death 
steps  in,  and  with  one  blow  ends  both  the  life  and  the 
business  together. 

There  is  nothing  in  the  reading  line  so  "  flat,  stale  and 
unprofitable  "  as  the  advertising  pages  of  our  newspapers. 
It  would  seem  that  there  is  only  one  set  of  ideas  that  will 
pass  current  in  that  department,  and  that  each  advertiser 
had  taken  the  greatest  care  to  eliminate  every  original 
illustration  of  his  idea  from  his  advertisement.  Black's 
advertisement  would  answer  for  Brown's,  merely  chang- 
ing the  number  of  the  street.  Green's  for  his  neighbor 
White,  and  vice  versa.  I  have  sometimes  thought  it 
would  save  the  printers  work  if  they  would  have  some  of 
them  stereotyped,  with  blanks  for  the  name  and  residence, 
to  be  changed  as  occasion  required. 

To  a  great  extent  the  subjects  treated  of  in  advertise- 
ments are  the  great  concerns  of  every  day  life,  about 
which,  in  their  variety  of  detail,  long  columns  of  interesting 
reading  matter  are  indited  editorially  or  in  correspon- 
dence, and  printed  side  by  side  with  the  advertisements, 
meeting  with  eager  readers. 

It  is  iwssible  that  some  of  the  want  of  originality  in 
advertisements  arises  from  a  very  laudable  desire  in  the 
advertiser  to  avoid  the  appearance  of  being  singular  or 
eccentric.  He  wishes  to  make  known  his  business,  yet 
avoid  personal   notoriety.     I  have  obsei-ved  this  trait 


124 


Tak'mff  adrantage  of  t7ie  Advertising, 


cropping  out  in  the  characters  of  many  people.  They 
can  not  endure  to  have  themselves  talked  about.  So- 
cially this  is  a  very  good  trait,  but  such  persons  gener- 
ally lack  energy  in  business.  They  are  afraid  to  go  for- 
ward in  any  unbeaten  path — not  because  they  think 
it  may  prove  unprofitable,  but  simply  from  fear  of  what 
the  "Mrs.  Grundys"  of  their  acquaintance  will  say. 
Somebody  might  laugh  at  the  originality  of  their  adver- 
tisement or  disparagingly  criticise  it,  and  that  would  hurt 
their  feelings.  If  our  feelings  were  moved  oftener 
by  the  inner  consciousness  of  right  and  duty,  and  were 
less  sensitive  to  the  whims  and  opinions  of  those  around 
us,  we  should  get  through  the  world  more  comfortably, 
and  the  world  would  grow  wise  faster :  as  each  man's 
originality  would  have  a  better  opportunity  to  develop. 
After  all  which  may  be  said  on  the  propriety,  or  the 
best  method  of  advertising,  it  should  not  be  forgotten 
that  advertising  is  only  an  auxiliary  to  a  business — mainly 
useful  in  increasing  the  sales — and  thereby  increasing 
the  profits  of  a  business  which  has  an  inherent  life  in 
itself.  It  is  the  whip  which  applied  to  the  active  and 
vigorous  horse,  causes  him  to  spring  forward,  and  earlier 
reach  his  journey's  end.  It  is  of  little  use  to  the  jaded 
and  lazy  beast.  There  must  be  such  a  co-operation,  by 
due  activity  in  the  other  and  more  essential  parts  of  the 
business,  as  will  turn  to  good  advantage  the  notoriety 
given  by  advertising,  or  the  notoriety  is  useless.  When 
people  have  been  induced  to  visit  a  place  of  business 
through  advertising,  they  must  be  so  received  and  so  dealt 
with  that  they  do  not  leave  with  the  impression  that  they 
have  been  deceived  by  the  advertisement.  Unless  this 
is  done,  the  business  can  not  be  increased,  nor  even  sustain- 
ed, as  the  advertiser  has  then  only  advertised  and  made  more 
conspicuous  his  own  incapacity  to  conduct  his  business. 


CHAPTER  VIII. 

EMPLOYMENT   OF   CLERKS. 

ONE  good  clerk  is  worth  a  dozen  poor  ones.  The  one 
is  an  aid  in  the  business,  the  others  only  obstacles.  The 
former  relieves  the  proprietor  by  his  care  and  attention 
to  such  of  the  details  of  the  business  as  are  entrusted  to 
him ;  the  latter,  by  their  carelessness  and  mistakes,  cause 
increased  labor  in  the  necessity  of  not  only  looking  after 
them,  but  also  after  every  detail  of  the  work  entrusted  to 
them,  to  see  that  it  is  properly  done. 

One  of  the  greatest  difliculties  of  finding  good  clerks 
arises  from  the  unwillingness  of  men  in  the  trade  to  teach 
them,  and  perhaps  somewhat  from  llie  unwillingness  of 
boys  to  obligate  themselves  to  remain  long  enough  with 
one  employer  to  be  taught.     Merchandising  is  a  trade  re- 
quiring for  a  surety  of  future  success,  quite  as  long  an 
aj^prenticeship   to  learn    as  the  majority  of  mechanical 
trades— though  unfortunately  boys  do  not  think  so.    And 
when,   therefore,   such  are   taken  by  proprietors  of  re- 
tail stores  into  their   service,  the  engagement  on  both 
sides  is  of  too  transient  a  character.     No  arrangement  is 
made  looking  really  to  learning  the  business.     The  im- 
mediate necessity  for  a  boy  to  fold  and  tie  up  goods,  carry 
out  bundles,  and  keep  the  store  in  order,  is  all  that  is 
sought  to  be  supplied  on  the  side  of  the  employer  ;  and 
the  weekly  salary  to  be  received,  with  perhaps  the  op- 
portunity to  steal  a  knowledge  of  the  business  is  all  that 
is  expected  by  the  clerk.     No  permanent  or  sufficient  ar- 
rangement is  made,  in  view  of  what  both  parties  will 


126 


2'ke   IVay  Clej^l's  are  Tatrght, 


need  in  two  or  three  j^ears — the  one  an  intelligent  and 
cdiicatcd  aid  in  the  business ;  the  otlier  a  full  knowledge 
of  the  business  details. 

Under  such  an  engagement  the  boy  remains  a  year  or 
two,  nominally  a  learner,  and  his  employer  with  tlie  best 
disposition  towards  him,  feels  but  little  interest  in  en- 
deavoring to  teach  him  tlie  details  of  the  business,  be- 
yond Avhat  answers  the  immediate  necessity  of  the  day, 
as  he  is  in  doubt  whether  he  Avill  remain  with  him  from 
one  month  to  the  next.  The  boy  picks  up  what  informa- 
tion he  can  from  observation,  and  at  the  end  of  a  year  or 
so  knows  by  name  the  different  articles  kept  for  sale,  and 
can  sell  goods  to  some  of  the  more  intimate  customers  of 
the  house.  Seeing  no  great  prospect  of  advancement,  as 
his  employer,  knowing  his  ignorance,  does  not  overrate 
him  or  increase  his  salary,  he  seeks  an  engagement  in 
some  other  house ;  not  now  as  a  novice,  but  claiming  to 
be  able  to  sell  goods,  and  if  he  has  sufficient  assurance 
and  self-conceit  may  obtain  a  largely  increased  salary. 
The  hardly  half  taught  young  man  is  by  the  change  now 
placed  in  a  position  where  he  in  turn  becomes  the 
teacher,  by  example  at  least,  of  any  novice  his  new  em- 
ployer may  liave  in  his  service. 

The  new  employer,  in  his  efforts  to  make  the  best  of  a 
bad  bargain,  may  teach  him  something  more,  or  with 
some  objurgation  on  the  impossibility  now-a-days  of  get- 
ting a  clerk  worth  having,  submits  in  despair  till  the  end 
of  his  engagement,  when  the  clerk  with  one  more  year's 
experience  finds  another  place,  and  his  employer  another 
clerk  which  is  generally  a  duplicate  of  the  previous  one^ 
only  with  a  different  class  of  faihngs. 

Whatever  may  be  the  youth's  changes,  the  day  comes 
at  last  when  he  has  spent  tune  enough,  and  ought  to  be 
thoroughly  educated  in  his  occupation.    Should  he  possess 


The   yf^ay  they  ought  to  be  Taught,  127 

what  perhaps  only  one  in  ten  have— great  natural  gifts  of 
discrimination  and  facility  of  acquiring  information  from 
observation,  he  may,  by  remembering  something  of  what 
he  has  seen,  and  forgetting  a  good  deal  of  the  so-called 
business  knowledge  which  he  has  ignorantly  picked  up, 
in  the  end  become  a  good  salesman,  and  a  valuable  ac- 
quisition to  a  retailer  in  his  business. 

How  much  more  satisfactorily  is  that  man  served,  how- 
ever, who  first  carefully  selects  such  a  youth  as  he  thinks 
has  a  natural  adaptation  and  ability  for  the  business,  and 
then  makes  an  engagement  for  a  certain  period  of  five  or 
six  years,  on  a  specified  compensation  for  each  year,  part 
of  the  compensation  being  a  thorough  tuition  in  the  busi- 
ness.   The  certainty  of  being  repaid  in  the  later  years  of 
the  lad's  services  for  any  time  or- attention  taken  in  teach- 
ing him,  is  a  fair  inducement  for  the  employer  to  bestow 
both,  and  impart  to  him  in  the  daily  routine  all  which 
the  employer  himself  knows  concerning  the  management 
of  the  business.    The  learner,  seeing  that  his  employer 
takes  an  interest  in  him,  feels  a  reciprocal  interest  in  his 
employer's  business,  and  they  both  soon  come  to  view 
the  relation  between  them  as  of  higher  consideration  than 
a  mere  mercenary  engagement.     When,  under  such  cir- 
cumstances, a  boy  does  not  live  with  his  parents  or  other 
personal  friends  who  will  look  after  his  moral  training  at 
the  same  time  as  his  business  training  is  advancing,  it  is 
very  desirable  that  a  part  of  the  compensation  agreed  on 
should  be  board  and  living  in  his  employer's  family ;  or 
where  that  is  not  possible  or  convenient,  in  the  family  of 
some  friend  of  the  employer,  where  his  actions  and  habits 
outside  of  the  business  may  have  the  restraining  influ- 
ence of  his  employer's  observation. 

A  fiilse  notion  prevails  with  many  worthy  people,  that 
in  thus  training  up  a  youth,  they  are  entitlmg  themselves 


128         Untenable  Objections  to  training  Clerks, 

to  a  continuance  of  his  services  after  the  first  engagement 
expires,  at  the  period  when  the  young  man  having  thor- 
oughly learned  his  business,  naturally  is  desirous  of  for- 
warding himself  in  the  world.  Nearly  the  only  objection 
advanced  against  this  method  of  training  up  clerks  has 
been  what  was  fxlsely  called  theiY  ingratitude  for  what  had 
been  done  for  them.  Instances  of  this  kind  are  known 
where  all  the  kindly  affection  which  had  grown  up  be- 
tween the  parties  by  years  of  mutual  confidence,  was  em- 
bittered at  the  end  of  the  term,  by  some  ill-natured  dis- 
play of  this  disposition  on  the  part  of  the  employer;  who, 
had  he  reflected,  would  have  overlooked  the  indiscreet  or 
trifling  remarks  which  he  too  readily  construed  into  signs 
of  ingratitude. 

A  young  man  naturally  rejoices  at  the  arrival  of  that  pe- 
riod in  his  life  when  he  is  regarded  as  a  man ;  and  it 
should  not  be  hastily  concluded  that  because  he  is  so  par- 
ticularly joyful  at  the  expiration  of  such  a  period  of  ap- 
prenticeship, (if  it  may  be  so  called)  that  he  has  felt  the 
service  or  engagement  a  hard  one.  The  employer  who 
may  be  placed  in  such  a  position  should  be  very  sure  that 
there  is  ingratitude  on  the  part  of  his  clerk,  before  he 
manifests  the  opinion  by  any  speech  or  outward  action. 
And  if,  at  some  time,  he  is  induced  to  believe  so  hardly  of 
his  clerk,  let  him  specially  consider  again  whether  on  the 
whole  there  is  anything  that  the  young  man  ought  to  feel 
peculiarly  grateful  for.  Whether  for  all  that  has  been 
done  for  him  he  has  not  returaed  a  full  compensation  by 
his  faithful  services,  and  whether  there  is  not  quite  as 
much  cause  for  gratitude  on  the  employer's  as  on  the 
clerk's  side. 

An  employer  who  is  so  selfish  that  he  cannot  receive 
some  of  the  compensation,  in  such  an  engagement,  in  the 
the  merit  of  the  action  itself,  even  when  the  recipient  fails 


A.  Judicious  Ziberality  to  Clerks. 


129 


to  fully  recognize  its  value,  is  not  to  be  envied,  and  is  in 
truth  unworthy  and  unfitted  to  have  the  training  of  any 
one.  • 

A  fair  degree  of  liberality  toward  a  young  man  at  the 
end  of  such  a  term  of  service,  is  actually  advantageous 
to  the  employer.  Knowing  his  clerk's  qiialifications  and 
ability  to  fill  situations  more  i:)rofitable  than  he  can  per- 
haps offer,  it  should  be  his  eftbrt  to  aid  him  in  his  en- 
deavors to  obtain  such  a  position.  He  will  find  a  bene- 
ficial influence  resulting  therefrom  on  the  younger  clerks 
still  in  his  employment,  coming  on  in  different  degrees 
behind  the  one  that  has  now  attained  his  education. 
They  will  see  that  there  is  something  to  strive  for  beyond 
merely  getting  through  this  probationary  period  with  the 
best  grace  and  least  work  they  can.  It  acts  as  an  in- 
centive to  them  to  be  diligent  and  attentive  to  the  com- 
mands and  wishes  of  the  employer,  so  that  at  the  end  of 
their  engagement  they  too  may  be  found  worthy  of  a 
recommendation  to  a  higher  and  more  lucrative  position. 

But  the  retailer  commencing  business  must  of  neces- 
sity employ  clerks  already  taught,  and  must  take  them  as 
he  can  best  find  them.  If  he  does  not  expect  very  much 
from  them  he  will  be  less  likely  to  be  disappointed.  He 
who  anticipates  hiring  clerks  that  will  attend  better  to 
the  business  than  he  does  himself;  who  will  come  earlier 
in  the  morning,  stay  later  in  the  evening,  sell  more  goods, 
be  more  courteous  and  attentive  to  the  customers,  or  at- 
tend to  any  one  department  of  the  business  better  than 
he  does  himself,  will  very  often  find  his  anticipations  not 
realized.  With  the  retailer  who  would  prosper,  it  is 
quite  as  necessary  as  it  is  to  the  farmer  to  say,  "  come, 
boys,"  instead  of  "  go,  boys."  If,  therefore,  a  business 
has  been  or  is  being  established,  which  i.t  is  designed  to 
leave  mainly  to  the  management  of  hired  clerks,  because 


130       £^yil  Infiuence  of  Sadly  T?^ained  Cte7'ks. 

of  want  of  time,  or  want  of  capacity  on  the  part  of  the 
principal,  it  will  be  preferable  to  give  an  interest  in  the 
business  to  a  principal  clerk,  so  that  he  may  hare  the 
motive  to  urge  him  to  attention  in  the  business  which  the 
owner  himself  would  have. 

If  though,  the  proprietor  of  a  new  business  wants 
clerks  to  assist  him,  he  should  endeavor  to  secure  such  as 
have  had  a  thorough  business  training  in  houses  of  repute 
and  character,  by  paying  them  sufficient  salary,  until  such 
times  as  he  can  train  up  others.  Much  ought  to  depend 
upon  the  character  of  a  house  in  which  a  clerk  has  been 
trained.  Ill  manners,  rude  speech,  tricks  of  the  trade, 
and  otlier  evil  results  of  bad  teaching,  are  easily  carried 
from  one  house  to  another.  Indeed,  the  mere  presence 
conspicuously  of  a  clerk  long  known  as  with  some  house 
of  selfish  and  illiberal  character,  will  give  a  suspicious 
taint  to  the  new  house. 

Some  dealers  have  a  principle  of  never  keeping  clerks 
long  in  their  employ,  on  the  ground  mainly,  that  while 
they  are  new  in  the  place  they  are  more  zealous,  and  make 
greater  efforts ;  while  after  they  have  been  some  time  in 
the  one  employment  they  become  careless,  feeling  that 
they  are  settled  permanently.  Such  employers  are  gen- 
erally not  well  served,  as  the  short  term  of  service  of  each 
clerk  is  soon  noticeable,  and  really  good  clerks  object  to 
making  an  engagement  which  is  pretty  sure  to  fail  of  be- 
ing renewed  at  the  end  of  the  year.  All  things  consider- 
ed, it  is  better  to  make  as  few  changes  as  possible  in  em- 
ployees, retaining  them  from  year  to  year,  if  suitable 
even  in  a  modified  degree.  We  know  the  failings  of  those 
we  have,  and  how  far  we  may  depend  on  them.  A 
stranger  has  to  be  watched  at  all  points,  until  we  learn 
where  he  may  be  trusted.  Though  this  disposition  should 
not  be  carried  so  far  as  to  retain  those  who  by  their  mis- 


Subordination  ~hoh^  Maintained, 


131 


conduct  or  carelessness  show  that  it  requires,  in  their  opin- 
ion, no  effort  or  anxiety  on  their  part  to  be  continued  in 
the  service.  When  a  clerk  shows  that  he  has  no  anxiety 
longer  to  conciliate  his  employer  or  obey  his  reasonable 
requirements,  it  is  time  he  was  away  from  his  service. 

Clerks  are  sometimes  employed  only  from  week  to  week, 
or  month  to  month.  A  very  unwise  custom,  except  with 
supernumerary  clerks  who  are  taken  on  only  for  a  short 
time  in  the  height  of  a  season's  business,  and  can  readily 
be  dispensed  with  at  any  moment.  A  clerk  who  is  liable 
to  be  discharged  at  the  end  of  every  week  or  month,  is 
constantly  looking  around  for  more  permanent  employ- 
ment, and  necessarily  cannot  so  thoroughly  give  his  at- 
tention to  his  employer's  interest.  Besides,  the  principal 
himself  must  always  fear  that  in  the  busiest  period,  when 
he  can  least  readily  replace  him,  the  clerk  may  leave  to 
his  disadvantage. 

Clerks  are^  human — they  have  their  failings ;  they  re- 
quire sometimes  to  be  plainly  spoken  to,  for  omissions  of 
or  inattention  to  the  duties  incumbent  on  them.  And  the 
employer  who  fails  to  speak  at  the  proper  time  neglects 
an  important  duty,  and  will  have  no  subordination  among 
the  clerks  in  his  business.  But  it  must  not  be  forgotten 
that  when  they  do  well  they  like  to  be  praised  for  it,  or 
at  least  have  the  service  acknowledged  by  a  kindly  re- 
cognition. The  employer  who  has  plenty  of  censure  for 
his  employees  and  no  praise,  is  in  a  fair  way  to  be  very 
poorly  served.  Nor  are  clerks  mere  machines,  that  being 
used  for  the  day  can  be  thrown  aside  when  the  night 
comes,  without  a  care  or  thought  about  them,  till  they 
are  again  wanted.  Though  an  employer  may  think  that 
there  is  no  moral  obligation  resting  on  him,  to  care  for 
his  clerk's  behavior  when  away  from  his  place  of  business, 
his  pecuniary  interest,  which  will  often  be  imperilled  by  a 


132 


2%e  Clerk's  JVecessities, 


clerk's  misconduct,  should  induce  him  to  see  to  it,  that 
the  hours  of  leisure  of  those  in  his  employment,  are  not 
spent  in  evil  courses,  which  will  bring  discredit  on  them, 
and  subsequently  on  him  for  employing  them. 

In  employing  clerks  some  regard  should  be  had  to  the 
clerk's  necessities  for  living  expenses.  If  the  salary  pro- 
posed to  be  given,  is  clearly  inadequate  to  keep  his  fam- 
ily, or  himself  if  single,  in  the  manner  he  has  been  accus- 
tomed to  live,  or  near  it,  it  will  be  better  to  forego  his 
services.  It  often  happens  that  a  retailer  wanting  only  a 
third  rate  clerk  to  fill  a  position  which  a  smart  boy  of 
seventeen  could  fill,  to  whom  he  expects  to  pay  a  very 
moderate  salary,  yet  one  fully  equivalent  to  such  a  youth's 
services,  has  applications  from  experienced  clerks  out  of 
situations,  who  are  willing  to  take  such  a  subordinate  ix>- 
sition,  until  they  can  find  something  better  to  do.  The 
retailer  mav  feel  that  it  is  almost  a  charity  to  employ 
such  a  man— who  perhaps  has  a  family  to  provide  for— m 
preference  to  a  boy  who  may  be  living  at  home  with  his 
father,  and  in  no  want,  and  thinks  he  is  fortunate  in 
getting  so  able  a  clerk  at  so  low  a  salary.  But  the  re- 
sult in  such  cases  is  generally  unfavorable.  It  is  poor 
policy  to  employ  any  one  in  positions  so  responsible  as  a 
retailer's  clerks  are  generally  placed  in,  when  the  salary 
paid  them  is  inadequate  to  their  support.  If  no  worse 
result  ensues  than  over-drawing  of  the  salary,  as  pecula- 
tion, or  the  taking  of  goods  surreptitiously,  it  will  prove 
in  practice  that  tlie  dealer  is  not  as  well  served  in  the  de- 
partment he  sought  to  fill— though  the  employee  may  be 
valuable  in  other  positions  in  his  business,  where  he  is  not 
really  needed— as  he  would  have  been  by  the  employment 
of  a  younger  and  less  experienced  person,  who  would  have 
been  ambitious  to  excel  in  that  special  position,  so  that 
he  might  have  a  chance  to  be  promoted  to  a  higher  one. 


Getting  rid  of  Incompetent  Clerks. 


133 


When  a  man  needs  a  cart  horse  at  a  price  of  one  hun- 
dred dollars,  his  want  is  not  supplied  when  for  the  same 
amount  he  purchases  a  race  horse  worth  a  thousand  dollars. 
Sometimes  on  account  of  natural  dullness  or  distaste  for 
the  business,  boys  do  not  readily  acquire  the  knowledge 
of  it,  while  the  dealer,  induced  by  family  or  friendly  con- 
siderations towards  them,  still  retains  them  in  his  em- 
J)loyment.  Even  with  older  clerks,  often  evil  habits  of 
various  kinds  cause  them  to  be  a  continual  source  of  an- 
noyance, and  though  at  times  efficient,  they  are  so  unreli- 
able as  to  be  of  but  little  real  value  to  their  employer. 
While  on  the  one  side,  a  retailer  should  not  expect  per- 
fection in  his  clerks,  he  ought  not  on  the  other  to  put  up 
with  confirmed  deficiencies,  which  can  not  with  reason- 
able efforts  on  his  part  be  amended.  The  training  of 
clerks  is  but  an  incident  in  his  business,  and  should  not 
require  too  much  of  his  time.  And  it  is  good  policy  to 
get  rid  of  such  incompetents  at  once,  and  not  waste  val- 
uable time  in  trying  to   reform  them. 


»   ^ 


CHAPTER  IX. 

ON  THE  ART  OP  SELLING  GOODS. 

IF  we  liken  the  whole  economy  of  a  mercantile  busi- 
ness to  the  structure  and  operation  of  a  steam  engine, 
the   department  of  selling  the  goods    may  with  great 
propriety  be  regarded  as  the  steam  which  sets  in  motion 
the  various  parts  of  the  complex  machine,  and  produces 
the  action  and  result  intended.     The  other  matters  are 
but  the  setting  of  the  engine— the  proper  fitting  and  ad- 
justment of  the  several  parts,  or  the  lubrication  which 
prevents  friction ;  without  special  attention  to  some  of 
which  it  is  possible  that  the  engine  will  move  if  enough 
steam  is  applied,  though  with  much  noise  and  friction, 
and  waste  of  power,  and  probably  without  accomplish' 
mg  much.     But  no  matter  how  nicely  the  several  parts  of 
the  engine  may  be  adjusted  and  oiled,  if  there  is  no  steam, 
or  an  insufficient  amount,  there  can  be  no  result.    And  all 
the  care  given  in  choosing  a  location,  selecting  a  stock  of 
goods,  and  properly  arranging  the  numberless  details  of 
the  business  is  but  incidental  to  the  main  object— which 
is  SELLING  THE  GOODS;   and  which  if  left  undone  makes 
useless  and  valueless  all  the  preparatory  work. 

This  must  therefore,  after  all,  and  before  all,  be  the 
great  object  which  the  retailer  should  perpetually  strive 
to  accomplish,  for  a  failure  in  this  is  a  failure  in  all.  It 
should  be  a  frequent,  yes,  daily  consideration,  how  he  can 
increase  his  sales. 

Men  there  are  engaged  in  business,  in  inconvenient  lo- 
cations, with  stocks  of  goods  in  disorder,  weak  credit, 


Selling  the  Goods,  the  Great  "Requisite,         135 

limited  capital,  and  if  possible  other  disadvantages,  who, 
in  spite  of  these  difficulties,  through  great  natural  and 
acquired  ability  to  sell  goods,  and  close  attention  to  that 
part  of  their  business,  are  making  fortunes.     Not,  per- 
haps so  quickly  or  so  pleasantly,  as  if  they  enjoyed  some 
of  the  minor  advantages.     But  it  will  not  be  too  much  to 
affirm  (for  the  result  is  self-evident)  that  however  much 
care  might  be  expended  on  the  preliminaries  of  a  busi- 
ness by  any  one,  if  he  did  not  bestow  some  considerable 
attention  to  the  selling  of  his  goods,  his  success  would  be 
exceedingly  limited.     Instances  are  doubtless  within  the 
knowledge  of  almost  every  reader,  where  persons  of  good 
character  and  general  ability,  lacking  this  one  great  re- 
quisite, have  commenced  business  under  very  favorable 
auspices,  and  to  the  surprise  of  their  friends  have  not 
succeeded.     Such  men  are  found  frequently ;  their  goods 
carefully  purchased,  and  well  suited  to  the  wants  of  the 
community ;  store  in  good  order,  the  machinery,  in  fact, 
all  complete  and  well  adjusted,  but  with  an  unsufficient 
head  of  steam  to  do  any  execution.     Generally  these  men 
are  the  easy,  good  natured  ones  of  the  community,  with 
the  best  of  reputations  for  all  the  moral  virtues,  careful 
and  prudent,  and  endowed  with  sufficient  good  qualities 
to  ensure  success  in  many  of  the  pursuits  of  life.     But 
they  are  sadly  out  of  place  when  they  attempt  to  sell 
goods.     Whether  from  inability  to  discriminate  individ- 
ual character  quickly,  slowness  of  speech,  want  of  full 
appreciation  of  the  necessities  of  the  case,  or  whatever 
cause,  they  lack  the  ability  to  sell  goods,  and  are  there- 
fore almost  uniformly  unsuccessful  in  trade ;  in  the  cur- 
rent phrase,  "  rusting  out." 

Probably  one  half  of  the  adult  male  population  in  these 
United  States  consider  themselves  well  qualified  and  fully 
competent  to  sell  goods.    And  if  other  circumstances 


136 


Quali/icaiions  of  a  Good  Salesman, 


were  favorable  would  have  no  hesitation  on  this  point 
about  embarking  in  a  mercantile  business  requiring  the 
salesman's  ability  to  the  greatest  extent.  Yet  it  may  be 
doubted  whether  there  is  one  person  in  a  hundred  who 
possesses  such  qualities  of  mind  and  person  that  he  can, 
even  under  very  favorable  circumstances,  become  a  good 
salesman. 

Almost  everybody  can  speak  in  public,  and  so  almost 
everybody  can  sell  goods;  yet  we  have  few  orators  and 
not  many  more  salesmen.  There  is  such  a  variety  of  in- 
formation and  versatility  of  mind  requisite,  without  which 
only  mediocrity  can  be  expected,  that  but  few  possess 
them  or  can  acquire  them  in  a  high  degree. 

A  good  salesman  should  have  a  comprehensive  know- 
ledge of  the  goods  he  sells,  their  origin,  peculiarities  and 
advantages   over   other   goods  of  similar  character,   for 
special  or  general  uses,  so  as  to  be  able  to  properly  com- 
mend  them.      He   should   know  their  defects  so  as  to 
best  apologize  for  them. "  In  addition,  a  general  know- 
ledge of  the  uses  and  purposes  to  which  they  are  put  by 
the  buyer,  and  also  a  knowledge  of  other  kindred  goods 
which  may  be  used  for  the  same  purpose,  so  that  he  may 
suggest  to  his  customer  the  peculiar  advantage  of  this,  or 
the  disadvantage  of  the  other,  when  the  customer,  as  is 
often  the  case,  does  not  yet  know  exactly  what  article  he 
does  want,  being  only  aware  of  the  necessity  of  supply- 
ing his  want  with  something  appropriate  to  the  purpose. 
And  in  all  this  he  should  have  a  knowledge  superior  to 
that  possessed  by  the  person  he  sells  to ;  for  any  exhibi- 
tion of  ignorance  by  the  salesman,  must  be  followed  in- 
evitably by  a  loss  of  some  of  the  confidence  which  the 
buyer  would  otherwise  repose  in  his  opinion. 

A  good  salesman  must  have  also  a  good  address,  mean- 
ing thereby  the  ability  to  express  his  ideas  clearly,  fluently 


Inftue^ices  which  :>it tract  or  TiepeZ  Sujyers,      137 

politely  and  deferentially,  together  with  an  acuteness  of 
mind  and  knowledge  of  human  nature  which  enables  him 
to  know  just  when  to  speak,  how  to  speak,  and  when  to 
keep  silent.  It  is  mainly  tliis  extensive  knowledge  of  hu- 
man nature — the  result  of  close  observation,  and  some^ 
times  seeming  almost  an  intuition — on  which  the  success 
of  the  salesman  depends. 

A  good  salesman  always  shows  too,  not  only  a  wish  to 
sell  his  goods,  but  a  desire  that  his  customer  should  be 
satisfied;  a  willingness  on  that  account  to  exhibit  hie 
wares  in  even  greater  variety  than  they  are  asked  for, 
with  minute  attention  to  the  buyer's  wishes,  and  all  as 
though  it  was  a  pleasure  to  do  it,  and  not  an  unpleasant 
task. 

Although  the  old  adage  among  merchants  that  "  goods 
well  bought  are  half  sold  "  will  always  be  a  truism,  for  if 
care  has  been  taken  to  get  just  such  goods  as  are  in  de^ 
mand,  and  they  are  offered  for  sale  at  reasonable  prices, 
there  is  not  much  necessity  for  great  efforts  to  dispose  of 
them  to  a  buyer,  who  may  need  them  quite  as  urgently 
as  the  seller  needs  to  sell  them  ;  yet  there  will  always  be 
a  great  many  articles  which  every  retailer  keeps,  which 
he  can  not  expect  to  off*er  more  advantageously  in  price, 
than  his  competitors  offer  them,  and  for  the  sale  of  which 
he  must  depend  on  other  influences  than  the  intrinsic 
merit  of  the  goods  themselves.  Such  articles  as  these 
the  buyer  will  purchase  wherever  he  is  most  honestly, 
honorably  and  agreeably  dealt  with  ;  and  it  is  in  the  sale 
of  these  that  the  salesman's  art  and  the  abilities  as  above 
mentioned  are  more  particularly  required.  If  the  goods 
are  exhibited  with  reluctance  and  with  apparent  discontent 
and  inconvenience — or  if  the  salesman's  speech  is  rude, 
insolent  or  clownish — or,  as  more  often,  supercilious  and 
arrogant,  as  if  he  felt  that  he  occupied  a  position  of  im- 


138 


Anxiety  to  Make  Sates, 


portance  as  compared  with  the  buyer— or  if  he  is  disposed 
to  be  snarlish  and  ill-natured  whenever  the  buyer  does 
tiot  readily  accept  his  asseverations  about  the  quality  and 
v^alue  of  the  article  he  praises,  or  seems  inclined  to  leave 
Without  purchasing,  it  can  hardly  be  expected  that  the 
buyer  will  be  induced  to  buy  there,  or  be  attracted  to  re- 
visit the  store  or  commend  it  to  others,  for  anything  that 
can  be  bought  elsewhere. 

Salesmen  who  exercise  so  little  control  over  their  o^vn 
passions,  clearly  show  that  they  have  mistaken  their  busi- 
ness, and  are  better  fitted  to  drive  oxen  or  swine,  a  voca- 
tion in  which  some  bluster  and  irritability  may  be  par- 
doned. 

When  there  is  an  apparent  absence  of  animation  and 
anxiety  on  the  salesman's  part,  a  similar  state  is  often  in- 
duced in  the  customer.  The  interview  and  examination 
of  the  goods  end  with  "  it's  not  of  much  consequence 
now;  I'll  call  again  when  I  need  it;"  and  probably  with- 
in  an  hour  after,  in  some,  other  store,  and  with  a  more 
earnest  and  energetic  salesman,  the  man  purchases  a  sim- 
ilar article,  in  no  way  better  suited  to  supjjly  his  wants 
than  that  which  he  had  previously  looked  at,  led  thereto 
solely  through  the  seeming  anxiety  of  the  salesman  to 
make  a  sale. 

It  is  not  meant  that  an  anxiety  must  be  counterfeited 
where  none  is  really  felt.  It  is  taken  for  granted  that 
every  man  in  business  has  an  anxiety  to  sell  his  goods ; 
but  one  man  may  make  but  little  exhibition  of  it  to  the 
customer,  while  another  attains  a  habit  of  showing,  in 
such  cases,  all  the  anxiety  he  feels. 

In  all  these  things,  however,  regard  must  be  had  to  the 
nature  and  disposition  of  the  customer.    The  salesman's  • 
object  is  to  satisfy  the  customer,  first,  that  the  article 
shown  is  just  what  he  wants,  or  if  not  exactly  that,  that 


^Differences  in  Character  of  buyers,  139 

it  comes  the  nearest  to  it  of  anything  which  can  be  had ; 
and,  second,  that  the  price  is  lower,  or  as  low,  as  it  can 
be  purchased  for  elsewhere.  And  when  we  remember 
that  two  persons  rarely  arrive  at  the  same  conclusion, 
through  the  same  chain  of  i;easoning,  or  from  a  view  of 
the  same  surrounding  circumstances,  it  will  be  readily 
seen  that  sometimes  much  tact  is  required  by  a  salesman, 
in  bringing  a  customer  to  the  point  of  buying. 

One  man  is  brought  to  that  only  by  a  fair  argument  on 
the  merits  of  the  goods,  as  compared  with  other  similar 
articles— all  the   advantages  of  this,  and  the  disadvan- 
tages of  the  others,  that  he  seems  to  hanker  after,  must 
.  be  brought  before  him ;  another  comes  to  his  conclusion 
to  buy  entirely  through   extraneous  influences— becausQ 
the  salesman  is  a  *'  good  fellow,"  "-  member  of  our  lodge," 
or  "association."    Another  is  like  a  child,  needs  to  be 
told  what  he  wants,  having  no  opinion  formed  about  the 
character  of  the  article  he  needs.     This  peculiarity  is 
often   found   among  men  very  intelligent  in  their  own 
sphere,  but  not  knowing,  or  caring  particularly  to  inform 
themselves,  about  the  small  matters  of  every  day  life,  such 
as  usually  concerns  the  retailer,  and  disposed,  therefore, 
to  accept  what  is  recommended  as  best  by  the  seller,  so 
long  as  they  have  confidence  in  his  honesty. 

Another  class  are  the  suspicious  ones  who  see  a  moun- 
tain in  every  molehill— who  can  neither  be  led,  coaxed  or 
reasoned  along.  At  every  attempt  on  the  salesman's  part 
to  do  either,  they  fly  back  farther  than  ever  from  the 
point.  These  generally  go  by  the  rule  of  contraries. 
There  are  a  great  many  of  them  in  the  world,  and  they 
need  to  be  treated  as  the  Irishman  treated  the  pig  he 
was  driving  to  Cork— kept  of  the  opinion  that  they 
are  wanted  to  go  the  opposite  way. 
Every  retailer  long  in  trade  will  have  noticed  this  class 


140 


The  Suspicious  Customer* 


Reference  to  Customers, 


141 


of  customers,  who  seem  to  know  so  much,  or  think  they 
do,  that  they  rarely  buy  the  article  he  recommends.  They 
are  not  unwilling  to  ask  the  dealer's  opinion  of  the  merits 
of  the  rival  styles  of  goods  which  may  be  offered  them 
to  select  from,  but  generally  end,  if  they  buy  at  all,  by 
taking  the  article  not  recomnaended  by  the  dealer. 

When  trading  with  such  a  customer,  a  sagacious  sales- 
men would  be  cautious  about  too  much  commendation 
of  the  article  the  customer  seems  most  to  prefer ;  for  by 
the  injudicious  commendation  of  that  the  customer  is  pre- 
judiced against  it,  and  there  may  be  no  other  that  pleases 
him.  It  is  a  better  course  rather  to  speak  of  the  merits 
of  the  article  which  does  not  seem  so  acceptable  to  him, 
so  that  his  choice  may  be  free  to  fall  on  that  which  he 
likes. 

This  is  not  required  to  be  carried  so  far,  nor  should  it 
be,  as  to  depreciate  the  article  he  likes  by  the  comparison, 
lest  it  confirm  the  customer  in  the  habit  of  distrusting 
others.  Any  tendency  which  it  may  have  to  confirm  him 
in  that  disposition,  may  be  thwarted,  if  after  the  selection 
is  made,  the  salesman  will  make  some  such  remark,  as 
that  his  disinclination  to  praise  the  article  selected,  was 
not  because  it  had  not  merits  as  great  as  the  others  which 
he  did  commend,  but  arose  solely  from  his  knowledge  of 
the  disposition  of  the  customer  to  refrain  from  purchasing 
anything  highly  commended.  And  at  the  same  time,  if 
possible,  pointing  out  some  hitherto  unnoticed  and  special 
merit  in  the  article  selected,  which  particularly  makes  it 
suited  to  the  buyer's  use. 

I  have  said  that  a  good  salesman  should  have  a  know- 
ledge of  the  character  and  qualities  of  the  goods  he  deals 
in,  superior  to  that  of  the  buyer,  at  the  same  time  it  is 
sometimes  very  injudicious  for  the  salesman  to  appear  to 
know  too  much.    It  is  to  his  advantage  to  have  the  buyer 


in  the  first  place  satisfied  with  himself,  as  a  preliminary 
to  his  becoming  satisfied  with  the  goods  which  he  is  about 
to  sell  to  him.  With  most  people  a  greater  satisfaction 
is  felt  in  buying  from  a  salesman  who  does  not  know,  or 
whom  they  think  does  not,  quite  so  much  as  themselves. 
The  customer  is  generally  conciliated  by  a  certain  amount 
of  deference  paid  to  his  opinion,  either  about  the  articles 
he  is  buying,  or  concerning  any  other  subject  which  may 
happen  to  come  up  on  the  occasion;  nor  should  he  be 
offended  by  any  arrogant  rebuttal  of  his  opinions  when 
respectfully  expressed. 

It  is  a  great  folly  for  the  salesman  to  get  into  an  argu- 
ment with  him,  even  though  satisfied  that  the  customer  is 
wrong.  Acute  observation  will  quickly  discern  whether 
the  customer  really  knows  as  much  about  the  goods  as  he 
professes  to,  or  whether  it  is  mainly  an  assumption  for  the 
purpose  of  increasing  his  importance  in  the  eyes  of  the 
salesman.  If  the  latter,  it  can  be  humored  to  advantage ; 
and  if  the  former,  the  salesman  will  act  wisely  in  con- 
fining his  remarks  to  such  points  as  he  clearly  knows  that 
he  is  right  on,  so  that  his  ignorance  may  not  be  betrayed. 

A  word  of  caution  may  be  proper  in  relation  to  the 
anxiety  which  the  salesman  should  show  to  effect  a  sale. 
In  no  case  should  this  be  carried  so  far  as  to  give  the  cus- 
tomer the  impression  that  the  seller  is  to  be  very  much 
benefitted  by  making  the  sale  in  question,  lest  a  suspicion 
arise  in  the  mind  of  the  customer  that  the  seller's  gain  is 
to  be  made  to  his  disadvantage,  and  he  be  thereby  in- 
duced to  decline  purchasmg  an  article  which  he  other- 
wise would  buy. 

It  was  this  influence  which  a  certain  proprietor  of  a 
large  business  endeavored  to  counteract,  when  noticing 
that  one  of  his  salesmen  had  been  for  some  time  earnest- 
ly striving  to  effect  a  sale  to  an  apparently  disinclined 


142 


IXsarmhiff  Customers*  Suspicions. 


The  Hude  Customer, 


148 


customer,  by  approaching  him  with  some  such  remarks  as 
the  following — addressed  to  the  salesman : 

"  Well,  Thomas,  you  seem  to  have  been  trying  very 
hard  to  make  a  sale ;  what  is  the  matter  ?  Doesn't  the 
article  suit  the  gentleman  ?  " 

"  Yes,"  answers  Thomas,  "  the  goods  suit  him,  but  not 
the  price.  1  have  offered  it  at  five  dollars,  at  which  price 
it  is  cheaper  than  anything  of  the  kind  in  the  store,  but  I 
cannot  induce  him  to  buy  it." 

The  proprietor  taking  up  the  article  and  scrutinizing 
the  cost  mark,  replied,  "  At  that  price  it  is  of  little  con- 
sequence whether  you  sell  it  or  not.  There  is  too  much 
to  be  done  this  morning  to  spend  so  much  time  in  tryino- 
to  effect  a  sale,  and  if  the  gentleman  does  not  wish  it  at 
that  price,  you  must  let  him  go."  And  passing  on  to 
other  duties,  left  Thomas  with  the  customer — expecting , 
not  that  Thomas  would  let  the  customer  go,  but  that 
the  customer  will  conclude  that  Thomas'  anxiety  to  make 
the  sale  can  not  proceed  from  any  great  profit  that  will 
be  made  on  the  goods,  since  the  proprietor  seems  so  un- 
concerned about  sellinsf. 

The  extent  of  anxiety  which  a  salesman  should  exhibit, 
must  be  regulated  like  the  other  matters  mentioned — by 
the  disposition  of  the  customer.  One  will  not  buy  unless 
the  salesman  is  almost  vehement  in  his  desire  to  sell ;  an- 
other wants  very  little  of  such  earnestness,  just  enough 
to  show  that  there  is  a  willingness.  The  community  of 
purchasers  range  in  all  grades  between  these  two  ex- 
tremes. When  a  stranger  comes  to  buy,  whose  disposi- 
tion in  this  respect  is  unknown,  it  is  safer  to  be  moderate- 
ly anxious,  while  in  doubt,  as  we  are  more  ready  to  par- 
don what  we  think  an  excess  of  earnestness  and  warmth 
in  such  cases,  than  we  are  to  pardon  what  seems  coldness 
and  inattention. 


It  is  always  more  pleasant  to  a  stranger  entering  a 
store  to  make  a  purchase,  to  be  promptly  met  by  the  in- 
telligent, anxious,  expectant  face  of  the  salesman,  asking 
how  he  can  serve  the  incomer  ;  than  to  be  met  with  cold- 
ness and  apathetic  waiting  for  the  buyer  to  make  known 
his  wants.  The  store  is  the  home  of  the  salesman,  and 
the  incomer,  whether  stranger  or  acquaintance,  should  be 
met  as  he  would  meet  him  at  his  private  residence — at 
the  doorway  or  near  it,  with  a  welcoming  look  or  word. 

Buyers  can  be  rude  as  well  as  salesmen,  and  some 
think  themselves  privileged  at  such  times  to  use  very  un- 
complimentary language  about  the  goods  that  are  offered 
to  them,  provoking  replies  on  the  part  of  the  salesman, 
which  if  indulged  in  would  generally  end  in  the  loss  of 
the  sale  of  the  article  at  the  time,  perhaps  even  the  loss 
of  the  customer  forever  afterward. 

When  the  customer  professes  to  know  so  much,  and  to 
be  so  positive  in  his  assertions,  and  when  there  is  nothing 
really  in  the  character  or  price  of  the  goods  warranting 
the  invidious  remarks  he  may  make,  the  best  way  to  parry 
them,  if  it  be  desirable  not  to  give  offence,  is  by  a  little 
gentle  raillery,  which  he  can  not  take  amiss ;  by  which 
he  is  given  to  understand  that  he  is  saying  what  he  does 
not  truly  think  about  the  goods,  so  that  he  may  have 
them  offered  cheaper.  The  extent  to  which  this  resource 
can  be  availed  of  must  depend  upon  the  acquaintance 
and  relative  position  as  to  age,  &c.,  of  the  salesman  and 
the  customer.  It  is  at  best  a  dangerous  remedy,  and  un- 
less there  is  a  fair  certainty  that  it  will  answer  the  pur- 
pose in  any  particular  case,  it  is  best  to  avoid  risk  by  a 
silent  submission  to  the  remarks,  with  perhaps  a  simple 
expression  of  regret  that  the  article  does  not  suit.  Still 
there  will  occur  instances  when  the  salesman's  self-respect 
requires  that  the  customer  should  be  informed  in  the  po- 


I 


U 


144 


^xhibiHng  Goods, 


litest  way  possible,  tliat  his  unjust  assertions  and  remarks 
are  without  influence  or  eflect. 

When  a  customer  does  not  seem  to  know  exactly  what 
grade  or  style  of  goods  he  wants,  as  is  often  the  case., 
the  salesman  should  endeavor,  Avithout  too  much  ques- 
tioning or  too  many  words,  to  get  some  idea  of  the  use 
which  is  to  be  made  of  the  article,  or  the  price  Avhich  the 
customer  expects  to  pay,  so  that  he  may  be  able  to  ex- 
hibit his  goods  with  some  discrimination.  At  this  junc- 
ture price  is  of  more  importance  than  style,  as  people 
have  generally  a  more  definite  idea  of  the  amount  of 
money  they  want  to  pay  out,  than  they  have  of  the  exact 
style  or  quality  of  goods  they  will  purchase,  and  it  is 
more  difficult  to  get  them  to  go  beyond  their  limit  in 
price  than  it  is  to  fix  on  some  other  style. '  If  at  first 
goods  are  exhibited  of  much  higher  price  than  the  cus- 
tomer expects  to  pay,  the  inferior  qualities  afterward 
shown  him,  commensurate  with  the  lower  price  Avliich  he 
is  willing  to  pay,  seem  worse  by  the  comparison,  and  he 
is  less  easily  satisfied  with  them. 

As  a  general  rule,  therefore,  goods  should  not  be  shown 
which  can  not  be  sold  at  or  less  than  the  price  named,  un- 
til after  a  full  and  complete  effort  has  been  made  to  suit 
the  customer  with  the  others  without  success.  After 
that  there  can  be  no  loss  in  showing  a  better  grade  of 
goods,  prefacing  the  act  with  some  appropriate  remark 
such  as  "  if  you  will  go  a  little  higher  I  think  I  can  suit 
you." 

It  will  be  when  such  better  goods  are  shown  that  the 
general  knowledge  of  the  manufacture  and  intrinsic  value 
of  the  goods  dealt  in,  before  referred  to,  will  be  found 
useful.  Ordinarily  the  customer  will  then  be  satisfied 
with  the  quality,  but  desires  to  buy  this  better  quality,  at 
or  near  the  price  asked  for  the  inferior  goods.    The  great 


Giving  ^Reasons  for  Increased  ^^ice  of  Goods,  145 

majority  of  consumers  are  not  ready  to  see,  or  if  they 
see  will  not  always  acknowledge  the  necessity  for  so  great 
an  increase  in  price  as  a^  superior  article  always-  com- 
mands. In  a  cursory  view,  while  the  superior  article 
seems  better,  it  does  not  seem  so  much  better  as  to  war- 
rant so  great  an  advance  as  is  usually  obtained.  It  is  the 
current  belief  that  it  costs  very  little  more  to  produce  or 
grow  a  truly  good  article,  than  it  does  to  make  a  miser- 
ably poor  one,  and  therefore  that  the  former  can  be 
afforded  at  nearly  as  low  a  price  as  the  latter — that  if 
twenty-five  cents  will  buy  a  pound  of  poorly  made  butter, 
thirty  cents  ought  to  be  sufficient  to  pay  for  a  pound  of 
the  best ;  forgetting  the  great  rule  in  the  interchange  of 
commodities,  that  the  perfectly  made  article  is  always  very 
limited  in  quantity,  and  commands  a  high  price,  and  pays 
a  good  profit  to  the  one  that  produces  it,  while  the  in- 
ferior or  impei-fect  grade  is  always  over-abundant  and 
often  sells  at  a  loss. 

It  is  the  work  of  the  salesman  in  these  cases  to  explain 
clearly  the  cause  for  the  higher  price,  as  found  in  the  in- 
creased cost  of  manufacture,  by  the  use  of  a  better  raw 
material,  a  greater  weight  of  it,  finer  finish  or  newer 
fashion,  or  whatever  it  may  be.  It  is  not  enough  to  sim- 
ply say  "  the  goods  cost  more."  The  reason  is  required 
as  to  why  they  cost  more,  and  it  must  be  a  valid  reason 
to  have  any  influence  on  the  buyer. 

If  after  all  the  customer  is  unwilling  to  pay  the  higher 
price,  and  the  salesman  is  at  liberty  to  make  an  abate- 
ment in  the  price  by  throwing  off  some  of  the  fair  profit, 
and  he  has  reason  to  believe  that  that  will  induce  the  cus- 
tomer to  purchase,  he  should  make  the  abatement  in  good 
season  of  his  own  volition,  and  not  wait  for  the  customer 
to  offer  him  a  lower  price. 

It  is  generally  bad  policy  to  have  the  buyer  make  a 


146 


Talking  too  M'uch, 


price,  even  when  the  price  is  in  itself  satisfactory.  The 
buyer  founds  his  offer  mostly  on  the  asked  price,  and  not 
on  his  intimate  knowledge  of  the  goods,  and  when  the 
offer,  made  in  this  way,  is  accepted,  especially  after  two 
or  three  transactions,  he  is  ready  to  believe  that  the  deal- 
er's asking  price  is  no  criterion  of  the  value  of  the  goods, 
but  is  named  in  the  expectation  of  abating  from  it,  and 
hence  loses  confidence. 

When  an  abatement,  as  above  suggested,  is  meditated 
by  the  salesman,  it  is  a  good  plan  to  turn  the  attention  of 
the  customer  to  the  purchase  of  such  other  articles  as  he 
has  come  to  buy,  and  after  selling  all  of  these  that  are 
needed  or  can  be  sold,  then  to  recur  again  to  the  goods 
first  looked  at,  proposing  the  abatement  as  a  favor  on  ac- 
count of  the  other  purchases.  By  this  plan  the  evil  in- 
fluence of  an  abatement  in  price  is  fully  counterbalanced 
by  what  seems  the  friendly  effort  to  accommodate  the 
customer. 

In  the  belief  that  the  art  of  selling  lies  in  talking, 
salesman  sometimes  acquire  a  habit  of  talking  too  much. 
Two  injurious  effects  result  from  this  volubility.  One 
is,  that  in  the  enumeration  of  good  qualities,  some  will 
be  mentioned  which  the  article  has  only  in  very  moderate 
degree.  The  attention  of  the  purchaser  is  thus  called  to 
this  quality,  or  rather  lack  of  quality,  thus  unwisely 
brought  to  his  notice,  and  the  purchase  is  postponed  in 
the  hope  of  finding  something  elsewhere  which  will  suit 
better  in  this  respect,  when  if  nothing  had  been  said, 
this  particular  trait  in  the  character  of  the  article  would 
never  have  been  thought  worthy  of  consideration. 

The  other  evil  consequence  of  too  much  talking,  is  that 
the  salesman,  to  keep  his  tongue  running,  must  introduce 
extraneous  matters  as  to  whom  he  sold  or  exhibited  the 
goods  yesterday,  and  what  was  said  about  them,  gradual- 


Setlinff  ''  ^Bargains,'* 


147 


ly  running  off  to  the  topics  of  the  day,  and  drawing  the 
customer's  mind  from  the  consideration  of  the  article  and 
from  arriving  at  any  conclusion  about  the  goods.     Ko  al- 
lusion should  be  made  by  the  salesman  to  outside  matters, 
nor  should  he  respond  to  any  such  remarks  made  by  the 
customer,  except  in  short  answers,  as  "  yes  "  or  "  no," 
during  the  time  when  the  goods  are  being  inspected  with 
a  view  to  a  purchase.     At  this  period  of  the  negotiation 
the  customer  requires  to  have  an  opportunity  for  a  mo- 
ment or  two  to  decide,  except,  perhaps,  with  some  of  the 
weak-minded  who  can  never  come  to  any  conclusion  with- 
out aid.     The  salesman  must  do,  at  such  times,  as  the 
doctors  do  in  some  cases,  "  leave  nature  to  do  the  work," 
lending  a  helping  hand  only  in  an  emergency,  and  then 
always  in  harmony  with  nature. 

Sometimes  salesmen  injure  the  general  reputation  of 
the  goods  they  have  for  sale,  by  too  highly  praising  one 
or  two  articles  specially  brought  to  the  customer's  notice, 
as  "great  bargains,"  and  which  arc  really  below  the  or- 
dinary price.  If  the  salesman  has  such  goods  to  show,  it 
is  always  better  to  say  nothing  about  their  cheapness,  but 
to  introduce  them  to  the  customer's  notice  for  some  other 
qualification,  leaving  the  customer  to  notice  for  himself 
the  reasonableness  of  the  price.  If  nothing  be  said  by 
the  salesman  concerning  the  price,  the  natural  inference 
is  that  so  many  of  the  goods  sold  are  "  bargains,"  it  is 
not  thought  worth  while  to  speak  of  the  cheapness  of  any 
one  article;  whereas  if  the  salesman  injudiciously  exalts 
the  merit  of  cheapness,  the  inference  is  that  bargains  are 
rare,  since  so  much  is  said  of  the  one  instance,  and  that 
really  this  is  only  a  ''  bait  "  to  get  off  dear  goods. 

In  general  no  one  can  sell  goods  so  well  or  so  advan- 
tageously as  the  proprietor  of  the  store  himself;  and  any 
one  who  puts  off  such  business,  as  much  as  he  can  to  the 


148 


The  fVoprietor  the  Sest  Salesman* 


clerks,  while  he  occupies  himself  at  the  desk,  commits  a 
.great  mistake,  though  a  very  common  one.  When  a 
business  is  large  enough  to  employ  half-a-dozen  or  more 
clerks,  it  will  not  of  course  be  possible  for  the  proprietor 
to  confine  himself  very  closely  to  selling  goods,  as  there 
are  other  departments  of  the  business  to  be  attended  to, 
requiring  so  much  time  that  they  cannot,  as  in  a  smaller 
business,  be  done  at  odd  hours  of  the  day  or  evening. 
But  this  book  is  not  written  for  such  so  much  as  for  per- 
sons whose  trade  does  not  require  more  than  three  or  four 
clerks  at  the  outside.  In  all  these  limited  establishments, 
the  mistake  is  too  prevalent  of  the  proprietor  aping  the 
manner  and  practice  of  larger  business  houses,  and  en- 
throning himself  at  the  desk  as  a  sort  of  driver  over  the 
two  or  three  salesmen. 

In  such  a  position  the  dealer  does  not  come  closely 
enough  in  contact  with  his  customers,  while  in  the  act  of 
buying,  to  know  their  tastes  and  desires  regarding  the 
goods  offered,  as  he  ought  to  enable  him  to  make  his 
purchases  properly.  The  best  place  for  the  proprie- 
tor in  such  moderate  establishments,  especially  in  the 
business  hours  of  the  day,  is  behind  the  counter  selling 
his  own  goods,  or  from  counter  to  counter  aiding  judi- 
ciously his  clerks  in  their  efforts  to  sell,  and  hearing  di- 
rectly from  the  customers  the  objections  they  have  to  his 
goods,  so  that  when  he  goes  to  purchase  again,  he  may 
know  what  to  select  to  suit  them,  and  what  to  reject  as 
objectionable. 


CHAPTER  X. 

SELLING    GOODS    FOR    CASH. 

WHETHER  the  retailer  will  undertake  to  sell  Iiis 
goods  exclusively  for  cash,  or  on  credit,  or  partly  in  both 
ways,  is  a  question  which  has  been  already  referred  to, 
as  necessary  to  be  considered  at  the  outset,  in  the  selec- 
tion of  the  location  and  in  the  economy  of  the  business 
generally.  But  it  may  be  well  to  give  the  whole  subject 
of  cash  and  credit  sales  some  further  consideration,  as  to 
their  respective  and  relative  advanta^-es. 

Selling  goods  for  cash  is  the  simplest  form  in  Avliich 
business  can  be  transacted,  and  wherever  it  is  possible  to 
do  sufhcient,  it  will  prove  in  the  end  most  profitable. 
The  sales  and  gross  profits  are  no  doubt  much  less  in  any 
given  circle  or  community  when  the  business  is  done  ex- 
clusivelyfor  cash,  than  it  would  be  if  done  on  credit; 
but  the'cxpenses  and  losses  are  also  less,  so  that  at  the 
end  of  the  year— or  rather  at  the  end  of  a  series  of  years 
■—the  net  results  are  greatest  in  the  cash  business.     The 
disadvantages  of  a  credit  business  can  only  be  seen,  and 
the  relative  diflfercnce  between  that  and  a  cash  business 
estimated,  after  the  lapse  of  years ;  as  it  often  occurs  in 
a  credit  business,  that  it  continues  reasonably  prosperous 
for  eight  or  ten  or  more  years  in  succession,  and  then  in 
one  or  two  years  of  depression  and  panic  the  accumulated 
profits  of  the  past  are  swept  away. 

A  cash  business  may  therefore  be  commended  :  First  for 
Its  economy,  requiring  fewer  clerks  and  less  of  the  time 
of   the   proprietor;  no  time   being   lost   in  keeping   ac- 


150  "Reasons  wlty  a  Cash  lousiness  is  ^est, 

counts,  making  out  bills,  dunning,  sucing,  or  investiga- 
ting  the   credit   and  ability  of  customers.     Secondly,  in 
less  onerous  duty  on  the  proprietor's  part,  he  having  only 
his  own  business  to  look  after,  while  in  a  credit  business 
he  must  continually  be  looking  after  the  business  of  many 
of  those  he  credits,  to  see  that  they  are  not  becoming  ir- 
responsible.    Thirdly,  for  its  fairness ;  as  all  pay  cash  one 
price  onlv  is  required,  while  in  crediting,  justice  requires 
that  lie  Avho  will  surely  pay  should  have  some  correspond- 
ing reduction  in  price  Wow  what  is  charged  to  him  from 
whom  the  pay  is  doubtful.    Fourthly,  for  its  harmonious 
influences,    there   being   fewer   circumstances   to    creat€', 
difficulties  between  the  dealer  and  his  customers,  such  as 
refusals  of  credit,  dunning,  sueing,  and  the  like.     As  none 
are  credited,  so  there  are  rone  to  take  offence  at  a  refusal ; 
and  on  that  account,  as  often  some  will  do,  speak  dispar- 
agingly of  the  dealer  and  his  goods,  among  their  friends 
and  acquaintances.     This  may  seem  to  some  a  small  mat- 
ter, but  every  man  who  sells  on  credit  at  retail,  trusts 
more  or  less,  certain  people  in  the   community,  when  he 
knows  they  are  of  doubtful  responsibility,  for  the  purpose 
of  retaining  their  friendship,  because  they  have  a  large 
circle  of  family  relations,  who  would  be  influenced  un- 
favorably if  these  particular  persons  were  not  trusted. 
And  lastly,  the  cash  business  is  to  be  commended  on  ac- 
count  of  its   comparative   safety.     The   dealer   has   his 
means  in  his  possession,  and  thoroughly  under  his  con- 
trol.    When  he  parts  with  his  money  in  the  first  instance;, 
he  receives  in  hand  goods,  supposed  to  be,  if  properly 
bought,  of  more  value  to  him  than  the  money.     As  he 
part's  with  these  goods  again,  he  receives  the  money  at 
once.     Unlike  the  person  who  sells  on  credit,  there  is,  in 
his  case,  very  little  risk  of  his  losing  his  means  by  the 
dishonesty,  incapacity  or  misfortunes  of  others. 


Two  Sides  to  a  Cash  business. 


151 


The  release  of  the  cash  dealer's  mind  from  the  asritat- 
ing  and  exciting  questions  of  the  resix>nsibility  of  cus- 
totners,  of  the  best  periods  for  and  the  ways  and  means 
of  making  collections,  and  of  arrangements  for  meeting 
his  own  payments,  leaves  him  free  to  bestow  a  closer  at- 
tention to  the  purchase  and  sale  of  goods,  by  which  only 
are  profits  made  in  business. 

Almost  every  reader  who  is  engaged  in  conducting  a 
credit  business,  will  bear  me  out  in  the  assertion  that 
more  than  one-half  of  his  time  and  thought  is  occupied 
with  matters  and  things  connected  with  the  crediting  out 
of  the  goods  and  the  collections,  and  less  than  half  with 
the  actual  business  of  buying  and  selling. 

A  cash  business  has  two  sides,  and  manv  fail  of  success 
because  they  only  attend  to  one  of  them.  It  is  quite  as 
essential  that  the  dealer  buys  for  cash  as  that  he  sells  for 
cash.  If  he  does  not,  his  chances  of  successfully  com- 
peting with  those  who  give  credit  are  very  limited.  The 
great  point  of  advantage  which  the  cash  dealer  has  over 
the  credit  one,  lies  in  the  lower  price  at  which  he  can  sell 
his  goods.  But  this  lower  price  can  be  but  trifling  if  the 
cash  trader  buys  his  goods  on  credit  the  same  as  the 
credit  trader.  Five  per  cent  would  probably  be  as  much 
difference  as  could  be  made,  and  as  the  credit  trader 
would  generally  be  willing  to  take  off  five  per  cent  from 
every  bill  sold  on  credit,  as  a  discount  for  prompt  cash, 
there  would  really  be  no  advantage  to  the  cash  trader,  but 
rather  the  reverse,  as  the  customer  of  the  credit  dealer 
would  have  the  goods  at  the  cash  dealer's  price,  if  lie 
paid  cash,  with  the  privilege  of  the  credit  by  paying  five 
per  cent  more. 

But  if  the  cash  dealer  makes  his  purchases  for  cash 
only,  buying  of  those  wholesale  houses  as  far  as  possible, 
who  also  buy  and  sell  exclusively  for  cash,  the  reduction  in 


152 


Wh{y  Goods  are  Cheaper  for  Cash, 


price  made  by  the  avoidance  of  each  dealer's  additional 
profit,  put  on  the  goods  to  cover  the  risk  of  loss  on  credit 
sales,  would  be  quite  considerable.  For  it  must  be  re- 
membered that  it  is  not  a  single  increase  of  price,  render- 
ed necessary  to  cover  the  risk  of  crediting,  that  makes 
goods  bought  on  credit  higher,  but  it  is  the  culmination 
or  air^rejration  of  such  extra  prices  when  the  goods  have 
passed  through  several  hands.  Because  the  consumer 
does  not  pay  cash  to  the  retailer,  the  retailer  cannot  to  the 
wholesale  dealer  ;  he  in  turn,  for  want  of  the  cash  from 
his  customers,  must  obtain  his  goods  on  credit  from  the 
importer  or  commission  house.  And  all  these  extra 
prices  are  necessarily  saddled  on  the  goods. 

Perhaps  this  idea,  which  is  an  important  one,  deserving 
more  attention  than  it  receives,  can  be  more  clearly  shown 
bv  an  example.  In  presenting  it  I  will  assume  that  each 
person  through  whose  hands  the  article  passes  can  afford 
to  sell  it  at  ten  per  cent  advance  on  cost  for  cash,  but  re- 
quires an  extra  five  per  cent  to  cover  risk  of  loss  when 
sold  on  credit.  This  ten  per  cent  may  for  present  pur- 
poses be  supposed  sufficient  also  to  cover  charges  for 
freight,  storage,  insurance,  etc.  The  rate  of  advance  for 
credit  is  certainly  under  the  average  of  that  which  is  cur- 
rent in  every  day  transactions.  Of  course  if  a  larger  ad- 
vance is  taken  as  a  basis,  the  difference  in  the  retail  price 
will  be  still  greater. 

For  the  illustration  take  the  article  of  wool,  as  it  and 
its  products  are  familiar  to  the  reader ;  simply  taking 
sufficient  to  make  a  pair  of  blankets,  say  eight  pounds. 

This  at  a  low  price  in  the  hands  of  the  grower 
in  Michigan,  we  will,  to  start  with,  call  worth 
twenty  five  cents  per  pound,  if  paid  for  in  cash, 

But  is  sold  to  the  agent  of  the  wool  dealer  at 
five  per  cent  more  on  credit,  or 


$2.00 


2.10 


Cash  and  Credit  transactions  Compared,       153 

And  by  the  wool  dealer  to  the  Eastern  man- 
ufacturer on  credit,  at  fifteen  per  cent  advance, . .        2.41 

The  manufacturer  adds  to  its  value,  let  us  sup- 
pose, in  manufacturing  it  Into  a  pair  of  blankets, 
a  sum  equal  to  its  original  cost,  so  that  it  costs 
him 4.83 

And  througli  his  commission  house  he  sells  the 
blankets  to  the  wholesale  dealer  on  six  months 
credit,  at  the  fifteen    i>er  cent  advance, 5.55 

Who  in  turn  jobs  them  to  the  retailer,  on 
uncertain  credit,  at  the  same  advance  of  fifteen 
per  cent,  making 6.39 

And  the  retailer  sells  them  to  his  customer, 
perhaps  the  original  grower  of  the  wool,  at  the 
same  advance,  with  the  understanding  that  he  is 
to  wait  for  payment  till  the  next  crop  of  wool  is 
in,  making  the  retail  price $7.35 

Now,  for  comparison,  look  at  the  price  the  consumer 
would  have  to  pay  if  all  the  transactions  from  beginning 
to  end  were  for  cash,  at  ten  per  cent  advance : 

Cost  of  wool  to  the  wool  dealer, $2.00 

**       "     to  the  manufacturer, 2.20 

Doubling  the  cost  for  manufacturing  the  same 
into  a  pair  of  blankets, 4.40 

Cost  of  the  pair  of  blankets  to  the  wholesale 
dealer, 4.84 

Cost  of  the  pair  of  blankets  to  the  retail 
dealer, 5.32 

Cost  of  the  pair  of  blankets  to  the  consumer,        5.86 

Making  a  difference  in  price  in  favor  of  the  cash  sys- 
tem of  $1.49;  or  twenty-five  per  cent  more,  which  the 
the  consumer  must  pay  for  his  goods  under  a  credit  sys- 
tem, than  he  would  have  to  pay  under  a  cash  one. 

It  will  be  readily  seen  that  no  one  dealer  in  the  series 


154 


Aroiding  the  Credii  Guaranties, 


of  credit  dealers,  could  by  paying  cash,  save  more  than 
the  five  per  cent  due  as  a  discount  for  his  own  special 
payinent;  and  would  therefore  accomplish  but  little  in 
reducing  the  price  of  his  goods  with  cash  in  hand,  unless 
he  made  his  purchases  from  those  who  are  in  the  cash 
series  of  dealers. 

The  number  of  persons  through  which  the  various  ar- 
ticles of  daily  use  and  sale— or  some  of  the  component 
parts  thereof— pass,  from  the  period  of  the  raw  product 
until  they  are  completed,  and  in  the  hands  of  the  whole- 
sale dealer,  makes  it  impossible  for  the  retailer  to  buy  all 
his   goods   without   getting  some   whose   cost  has  been 
swelled  more  or  less  at  different  points  along  the  line  by 
the  guaranty  connected  with  credit  sales.     Buf  a  steady 
adherence   to  buying  for  cash,  and  so  far  as  possible  from 
those  who  also  buy  and  sell  only  for  cash,  will  at  least 
avoid  the  necessity  for  three  credit  guaranties,  that  to  the 
wholesale  dealer,  that  to  the  retailer  himself  and  that  to 
,  the  consumer ;  and  cannot  fail  to  be  perceptible  in  the 
price  of  the  goods  ofiered  for  sale. 

Were  this  custom,  which  I  am  happy  to  see  is  a  grow- 
ing one,  of  buying  exclusively  for  cash  and  of  cash  houses, 
more  general,  the  influences  exerted  thereby  would  soon 
be  so  great  as  to  compel  cash  transactions,  by  all  the 
parties  through  whom  the  goods  might  come.     So  little, 
comparatively,  is  now  done  for  cash,  that  it  does  not  pay 
the  large  dealers  in  the  line  or  series,  such  as  the  heavy 
manufacturers  and  commission  men,  to  make  an  exclusive 
cash  business.     On  account  of  these  comparatively  lim- 
ited purchases  for  cash,  they  are  under  the  necessity  of 
arranging  their  business  on  the  credit  system,  giving  the 
cash  customer  such  advantages  as  they  can  afford,  in  the 
form  of  a  discount  for  ready  money,  which  is,  possibly, 
under  the  circumstances,  fully  equal  to  the  interest  and 


VTio  ffets  the  ^xtra  !Pro/2tin  the  Credit  System,  155 

lessened  risk  on  each  individual  transaction ;  but  is  not 
equal  to  the  advantage  which  would  be  gained  by  the  re- 
ceiver of  the  cash,  if  his  cash  business  was  great  enough 
to  enable  him  to  make  all  his  own  purchases  for  cash. 

The  query  will  naturally  arise  as  to  what  becomes  of 
the  extra  twenty-five  i>er  cent  which  it  is  shown  the  con- 
sumer pays  under  a  credit  system  ?  It  seems  reasonable 
to  suppose  that  some  of  the  dealers  in  the  series  must 
get  an  undue  share  of  profit,  and  that  ordinary  competi- 
tion would  soon  find  this  out,  and  the  profit  be  reduced 
to  a  lower  point. 

But  this  is  a  profit  only  in  imagination,  and  is  not  real- 
ized by  anybody.     A  small  part  of  it  goes  to  pay  interest 
on  loans  of  money  required  by  each  dealer  when  his  cus- 
tomers fail  to  pay  him  promptly,  according  to  agreement, 
somethmg  more  goes  to  pay  the  expense  of  keeping  ac- 
<-.ounts  and  making  collections,  but  the  larger  part  is  re- 
quired to  balance   the  losses  incurred  from   failures  to 
pay.      It  makes  good  to  the  farmer  his  losses  by  specu- 
lative  wool  dealers;  to  the  wool  dealer  for  his  losses 
by  rash  or  incompetent  manufacturers  ;  to  the  manufac- 
turer for  his  losses  by  extravagant  or  reckless  wholesale 
dealers;  to  the  wholesale  dealer  for  his  losses  by  ignorant 
or  unprincipled  retailei-s,  and  to  the  retailer  for  his  losses 
by  the  numerous  company  of  customers  who  live  by  their 
wits  or  are  unable  to  pay  through  their  poverty.    All 
these  various  and  multiform  losses  are  aggregated  on  the 
goods,  and  those  who  do  pay  are,  under  this  system,  tax- 
ed a  great  part  of  the  twenty-five  per  cent,  or  whatever  the 
reality  may  be— simply  to  make  good    the  losses  from 
those  who  do  not  pay. 

The  cause  why  the  manufacturers  and  dealers  in  Euro- 
pean countries  can  so  generally  undersell  us  in  our  own 
markets,  Hes  quite  as  much  in  the  prevalence  of  this 


1* 


156  One  'Reason  why  JForetgn  Goods  are  Cheaper, 

credit  system  of  doing  business  here,  as  in  the  lower  rate 
of-  wa<:^es  there,  which  in  many  branches  of  business  are 
not  so  reduced  as  we  are  accustomed  to  believe.  The 
business  men  there  have  passed  through  that  adolescent 
period  when  credit  sales  made  indifferently,  are  thought 
to  be  worth  within  five  per  cent  of  cash.  They  have  ar- 
rived at  that  maturity  of  experience  wherein  cash  is  main- 
ly required  in  transactions,  because  cash  operations  in  busi- 
ness produce  their  results  with  so  much  less  expense  and 
risk;  and  the  cost  of  production  is  thereby  materially 
reduced.  The  occasional  credit  a  manufacturer  may  give 
is  an  exception,  and  does  not  break  into  the  general  plan 
of  his  business,  which  is  founded  on  cash  principles. 
When  the  dealer  there  desires  goods,  and  has  not  the 
money,  his  recourse  is  not  to  the  person  from  whom  he 
buys  for  a  credit,  but  to  a  banker  whose  business  it  is  to 
lend  money,  for  a  loan.  And  if  he  has  such  securities  as 
will  satisfy  the  banker,  he  borrows  the  money  and  buys 

for  cash. 

The  dealer  there  does  not  give  way  to  the  temptation 
to  sell  on  credit,  because  he  gets  a  little  better  price. 
His  experience,  and  perhaps  the  experience  of  his  father 
and  grandfather  before  him,  whose  business  has  continued 
down  for  a  hundred  years  or  more,  has  taught  him  that 
these  alluring  profits  on  goods  sold  on  credit  are  too 
often  deceptive.  He  prefers  to  make  a  small  profit  and  a 
sure  one,  to  the  chance  of  a  larger  one  Avith  risk  of  loss, 
and  hence  he  sells  for  cash. 

It  is  useless  for  us  to  expect  to  cope  with  them  in  the 
manufacture  of  any  article  where  the  risks  of  credit 
largely  attach  to  the  raw  material  or  processes  of  manu- 
facture. Our  manufactured  goods  reach  the  point  theirs 
are  when  they  land  here,  loaded  with  credit  guaranties 
which  entirely  overbalance  any  advantage  we  may  have  in 


Mow  Increased  duties  Iteduce  ^^ices. 


157 


being  saved  the  expense  of  freight,  so  much  in  some 
cases  as  to  exceed  even  a  considerable  tariff'  on  the  for- 
eign goods. 

In  this  way  we  can  readily   explain  the  seemingly  cu- 
rious problem  in  political  economy,  which  we  often  see, 
where  an  increase  of  duty  on  a  certain  article  actually  re- 
duces the  price.     Before  the  duty  was  advanced,  the  man- 
ufacture "was  precarious,  and  prudent  men   kept   aloof. 
The  business  at  home  was  iu  the  hands  of  a  speculative 
class,  who  having  nothing  or  but  little  to  lose,  made  their 
purchases  and  sales  on  credit,  and  their  goods  were  high 
in  price,  while  they  made  nothing.     Under  the  protection 
of  the  increased  duty,  sufficient  capital  is  invested'  in  the 
business  to  enable,  and  to  some  extent  to  compel,  every  one 
dealing  in  any  of  the  materials  to  make  cash  transactions. 
The  manufactured  article   being  thus  relieved  from  the 
load  of  a  few  credit  guaranties  can  be  put  in  the  mar- 
ket at  prices  below  the  rates  established  previous  to  the 
advance  in  duty.     The  expectation  of  increased  profit,  by 
the  advance  in  the  duty,  was  the  inducement  to  invest 
the  capital  in  the  necessary  machinery,  aud  subsequently 
the  home  competition  reduced  the  profits  to  the  minimum. 


CHAPTER   XI. 


SELLING   GOODS    ON   CREDIT. 

THE  selling  of  goods  at  retail  on  credit,  to  be  profit- 
able, must  be  confined  to  localities  where  the  settled 
character  of  the  population  make  it  possible  for  the  deal- 
er to  know  with  some  degree  of  certainty  the  pecuniary 
responsibility  and  character  for  honesty  of  those  whom 
he  credits.  The  dispenser  of  credit,  in  the  comparatively 
small  amounts  of  retail  transactions,  should  know  some- 
what personally  of  the  customer  he  credits,  beyond  what 
he  can  learn  from  ordinary  enquiries  from  third  parties. 
He  has  not  time  to  go  around  to  make  the  enquiries  re- 
quisite and  usual  among  wholesale  dealers,  nor  would  he 
find  it  profitable  if  he  had.  Scarcely  any  one  is  so  poor 
that  he  can  not  find  some  two  or  three  friends  to  Avhom 
he  can  refer,  who  will  think  him  responsible  for  the  few 
dollars  of  a  retail  account.  Nor  is  it  sufficient  for  the  re- 
tailer to  take  his  customer's  word  regarding  his  ability  to 
pay ;  nor  should  he  be  satisfied  with  simply  a  belief  in 
the  customer's  good  faith  or  desire  to  pay.  He  must  in- 
vestigate and  know  that  the  head  is  right  as  well  as  the 
heart.  Honest  people  who  ask  for  credit  from  a  retailer, 
do  so  because  they  have  not  the  ready  means  to  pay. 
They  are  relying  on  their  growing  crop,  or  on  their  un- 
finished work,  which  gathered,  or  completed,  will  pro- 
duce the  means  to  pay  off"  any  debt  that  they  may 
create.  Experience  teaches  us  that  when  a  man  relies  on 
these  things,  or  generally  on  anything  in  the  future  to 
put  him  in  funds  to  pay  a  debt,  he  gives  a  couleur  de  rose 


^Personal  H^nowledge  'Required  in  Crediting,     159 


to  his  expectations,  magnifying  their  productiveness  or 
profit  beyond  what  the  reality  proves  to  be.  And  the 
field  that  was  to  produce  twenty-five  bushels  of  wheat  to 
the  acre,  or  the  contract  that  was  to  yield  a  thousand 
dollars  profit,  falls  one-half  short  of  the  expectation.  It 
requires,  therefore,  the  cool  investigation  of  him  who 
grants  the  credit,  who  will  lose  if  it  is  improperly  be- 
stowed ten  times  as  much  as  he  will  gain  if  properly 
given,  to  review  the  calculations,  dispersing  all  the  rose-* 
ate  hues,  and  looking  at  the  applicant's  prospects  in  their 
true  light. 

This  he  can  onlv  do  well  when  he  has  had,  or  can  have 
some  opportunity  to  learn  the  character  and  position  of 
the  applicant  by  personal  acquaintance,  aside  from  his 
own  representations. 

A  dealer  who  has  for  a  year  had  daily  opportunities  for 
hearing  of  and  seeing  the  transactions  of  any  particular 
individual  in  the  community,  ought  to  be  able  to  decide 
at  once  whether  he  is  sufticiently  responsible  to  be  credit- 
ed with  goods,  and  to  what  amount. 

The  following  classes,  as  a  general  rule,  should  be 
trusted  only  under  peculiar  or  particular  circumstances, 
and  then  never  to  large  amounts  : 

1.  People  of  extravagant  habits,  when  the  means  to 
support  the  extravagance  is  not  plainly  visible,  especially 
when  accompanied  with  idleness,  or  general  incompe- 
tence for  any  business  pursuit,  so  that  it  seems  a  wonder 
to  the  community  how  the  person  can  afford  such  luxuries. 

2.  Those  who  are  intemperate,  or  are  the  victims  of 
other  personal  vices,  which  disqualify  them  for  properly 
attending  to  business,  when  otherwise  capable. 

3.  People  in  ill  health,  especially  when  life  is  much  en- 
dangered thereby,  and  the  debt  would  be  lost  in  case  of 
death — or  its  collection  even  long  deferred. 


160 


People  that  are  dangerous  to  Trust. 


4.  Minors  and  married  women  who  are  not  legally  re 
sponsible  for  their  obligations. 

5:  Men  without  families,  whose  attachments  to  any  one 
locality  are  not  firm,  and  who  find  no  trouble  in  making 
a  change  of  location,  when  even  small  obligations  become 
pressing. 

6.  Strangers  either  with  or  without  families,  who  drop 
down  into  a  community  without  any  one  being  able  to 
learn  who  they  are,  what  they  are,  what  they  have  done 
or  are  doing,  or  what  their  resources  for  a  livelihood.  It 
such  men  have  means  upon  which  they  live  aside  from 
present  business  pursuits,  they  rarely  need  credit,  and  if 
they  depend  upon  their  daily  pursuit,  the  man  that  trusts 
them  ought  to  know  all  about  it,  that  he  may  judge  of 
his  security. 

7.  Persons  who  live  by  speculative  enterprises,  where 
they  have  nothing  to  lose  as  moneyless  contractors,  pro- 
duce speculators,  stock  gamblers,  and  the  like. 

8.  In  general,  all  those  who  having  lived  to  middle  life 
— say  fifty  years  of  age — show  no  desire  to  accumulate 
anything  towards  sustaining  themselves  on  the  down  hill 
of  life ;  a  turning  period  which  is  for  them  soon  to  occur, 
when  their  ability  will  be  scarcely  adequate  to  their  sup- 
port as  formerly,  and  which  may  include  all  those  who 
are  said  to  "live  from  hand  to  mouth."  When  people 
live  on  in  this  shiftless  way  until  they  are  fifty  years  of 
age,  it  may  with  much  certainty  be  predicted  that  in  a 
few  years  more  it  will  become  necessary,  or  at  least  seem- 
ingly so,  for  them  to  consume  the  daily  supply  before 
they  have  earned  it.  As  age  advances  the  the  ability  to 
earn  in  most  pursuits  lessens,  while  the  desire  to  spend, 
with  spendthrifts,  rather  increases. 

The   classes  that  may  be  safely  trusted  are  those  who 
have  means  which  are  not  immediately  available,  as  one 


Those  n^ho  are  Safe  to  Trust, 


161 


who  has  products  of  the  soil  or  of  his  manufacture',  await- 
ing the  appropriate  season  for  transportation  or  sale. 
Likewise  those  who  are  producing  articles  of  sale  that 
require  a  length  of  time  for  their  comjiletion,  during 
which  the  producer  needs  a  subsistence. 

Instances  of  the  first  would  be  farmers  or  lumbermen, 
whose  products  are  locked  up  by  frozen  rivers ;  or  an 
ice  dealer,  whose  ice  houses  are  stored  with  an  abun- 
dant supply,  but  who  has  to  wait  for  the  summer's  heat 
before  he  can  find  a  market  for  his  commodity. 

Of  the  second,  would  be  planters,  farmers,  manufac- 
turers and  mechanics  generally,  each  to  a  length  of  credit 
in  proportion  to  the  length  of  time  occupied  by  him  in 
the  process  of  his  production  or  manufacture.  The  hon- 
est and  industrious  shoemaker,  who  has  expended  all  his 
ready  money  in  the  morning  in  the  purchase  of  leather 
to  make  a  pair  of  shoes  for  a  customer,  which  would  be 
finished  by  night  and  paid  for  when  done,  could  be  as 
legitimately  trusted'  for  his  dinner  till  night,  all  other 
considerations  being  equal,  as  the  larger  manufacturer 
could  be  credited  for  his  subsistence,  and  that  of  his  em- 
ployees for  the  more  lengthened  period  which  the  exi- 
gencies of  his  business  might  require. 

In  general,  all  who  are  dependent  on  either  of  the  fore- 
going or  similar  classes  for  their  pay,  will  come  under 
the  same  rule  as  applies  to  the  class  on  which  they  are 
dependent ;  but  at  each  remove  of  dependence,  more  care 
must  be  exercised  in  examining  into  the  circumstances  of 
the  individual  case,  as  the  risk  of  unfavorable  circum- 
stances occurring  increases  with  each  remove,  if  there  be 
no  capital  to  fall  back  on.  Thus  the  farmer  can  be  cred- 
ited with  some  safety,  to  an  amount  equal  to  the  value  of 
a  quantity  of  wheat  he  may  have  on  hand  awaiting  the 
opening  of  navigation.    The  risks  will  be  his  dishonesty 


162 


Grades  o/\the  ^isk. 


— not  payiDg  after  he  shall  have  sold  his  wheat — and  his 
over  estimation  of  its  value,  and  on  that  account  getting 
deeper  into  debt  than  the  wheat  will  pay. 

There  would  be  a  greater  risk  in  crediting  a  mechanic 
on  the  faith  of  a  claim  for  work  done  for  such  a  farmer, 
for  though  the  farmer  may  prove  honest,  the  mechanic 
might  not.  There  would  be  another  increase  to  the  risk 
in  crediting  a  third  person  on  the  basis  of  claims  held  by 
him  on  the  mechanic,  as  it  would  now  require  that  all 
three  should  be  honest,  and  not  self-deceived  regarding 
their  claims.  Debts  piled  on  debts  in  this  way,  are  un- 
stable and  uncertain  enough  even  when  the  foundation  is 
composed  of  property  of  sufficient  and  stable  value. 
When,  as  sometimes  is  the  case  in  times  of  speculation, 
the  foundation  is  in  corner  lots,  oil  wells,  gold  mines, 
fancy  railroad  stocks,  or  other  glittering  schemes,  valued 
nominally  at  three  or  four  times  what  they  can  be  sold 
for,  the  whole  structure  is  but  a  house  of  cards  which 
the  first  breeze  of  distrust  blows  away,  with  the  flatter- 
ing hopes  of  all  those  who  have  given  credit  on  the  faith 
of  its  security. 

The  foregoing  rule  of  increase  of  risk,  with  increase  of 
distance  or  removal  from  the  producer  or  foundational 
security,  does  not  govern  when  the  removed  parties  have 
means  independent  of  the  producer.  In  these  cases,  how- 
ever, credit  is  rarely  given  on  the  expectancy,  but  rather 
on  the  reality  of  what  the  customer  has.  And  in  estimat- 
mg  a  man's  ability  to  pay  an  obligation,  the  first  consid- 
eration should  be  (after  that  of  honesty,)  as  to  whether 
the  man  is  able  to  pay  from  what  he  has  in  hand,  or 
whether  he  depends  on  something  that  some  one  else 
has  to  first  pay  him. 

In  trusting  people,  we  should  rely  more  on  what  they 
have  than  on  their  expectations,  and  take  a  view  some- 


Means  in  Iland  r €7' sits  JE^xpectations, 


163 


what  as  the  Frenchman,  a  retailer,  did,  of  whom  a  story 
is  told,  that  when  his  son  became  enamored  with  the 
daughter  of  a  reputed  wealthy  wholesale  dealer,  the  two 
fathers  met  together  to  settle  on  the  details  of  the  dowry 
that  should  be  given  to  the  daughter,  which  as  my  read- 
ers doubtless  know,  is  in  European  countries  an  essential 
part  of  the  engagement,  and  always  corresponds  some- 
what to  the  groom's  wealth  or  expectations.  It  is  need- 
less, perhaps,  also  to  add  that  the  parental  negotiations 
are  often  of  a  very  mercenary  character,  each  trying  to 
get  as  much  for  and  give  as  little  with  his  child  as  pos- 
sible, and  of  course  each  trying  to  make  the  future  ex- 
pectations of  his  child  take  the  place  so  far  as  possible  of 
present  wealth. 

The  retailer's  son  would  be  sole  heir  to  his  father's  es- 
tate, which  was  a  large  stock  of  goods  of  several  thou- 
sand francs  value,  on  which,  however,  he  was  heavily  in- 
debted. 

The  wholesale  dealer's  daughter  was  also  sole  heir  to 
her  father's  wealth,  which  was  rated  by  him  at  many 
times  the  value  of  the  retailer's  stock  of  goods.  As 
he  only  sold  by  sample  on  commission  he  had  no  stock  of 
goods  of  varying  and  uncertain  value,  like  the  retailer 
had ;  his  means  were  all  in  the  accounts  and  obligations 
of  his  customers  ;  their  value  was  fixed,  and  in  his  mind 
certain.  As  he  did  not  owe  anything,  he  could,  he 
thought,  claim  that  his  daughter's  expectations  at  his 
death  were  much  beyond  what  the  retailer's  son  would 
receive,  and  hence  a  very  limited  dowry  in  ready  money 
ought  to  be  sufficient. 

"  But,"  said  the  retailer,  "  your  wealth  is  all  very  shad- 
owy and  intangible.  Suppose  these  people  don't  choose 
to  pay  you — then  what  have  you  ?  While  I  have,  aa 
you  see,  this  large  and  valuable  stock  of  goods," 


\    1 


164 


The  JE:xtra  Tro/it  to  Cover  Losses. 


"  Ah !  but  then— sec  what  you  owe,"  exclaimed  the 

wholesaler. 

"  Oh,  that  doesn't  concern  me  ;  that  concerns  only  my 

creditors." 

In  estimating  the  responsibility  of  a  customer  it  will 
be  seen,  therefore,  that  there  are  three  things  to  be  kept 

in  view : 

1.  His  honesty  or  disposition  to  pay. 

2.  His  means  or  property  in  hand  or  in  expectation  out 
of  which  he  is  to  pay. 

3.  The  incumbrances  on  these  means,  in  the  form  of 
debts  already  created,  or  which  may  have  to  be  created, 
before  the  proceeds  of  the  property  can  be  realized  to 

pay  the  debt. 

it  is  the  full  investigation  of  these,  and  the  ability  to 
judge  correctly  upon  them,  which  enables  a  dealer  to 
grant  credit  with  a  good  surety  of  being  paid.  It  is  when 
he  fails  to  thoroughly  investigate  them,  and  takes  for 
granted  that  all  is  right,  that  he  gives  credit  at  random, 
and  is  likely  to  lose. 

In  a  business  arranged  on  the  credit  plan,  an  extra  pro- 
fit must  always  be  obtained,  to  compensate  for  the  losses 
which  will  be  incurred  by  failures  to  pay ;  also  to  cover 
the  loss  of  interest  for  the  period  of  the  credit,  and  for 
the  additional  expense  entailed  on  the  business,  in  keep- 
ing accounts,  making  out  bills  and  collecting  debts.  The 
precise  amount  of  extra  profit  required  to  cover  these 
items  is  the  difficult  problem  which  all  dealers  on  credit 
are  troubled  to  solve. 

Taking  the  whole  country  for  a  long  period — say  half 
a  century—statisticians  could  doubtless  arrive  at  something 
like  an  average  of  the  losses  by  bad  debts,  proportionate 
to  the  amount  of  goods  sold  on  credit.    Yet  it  is  scarcely 


The  Speculative  Periods* 


165 


possible  that  a  single  dealer  can,  in  the  short  period  of  his 
business  life,  settle  upon  any  near  approximation  of  the 
percentage  of  his  credit  sales  which  will  be  lost.  The  tide 
of  confidence  and  of  credit  in  the  United  States,  seems  to 
require  a  period  of  about  twenty  years,  if  unobstructed 
by  foreign  causes,  for  its  flood  and  ebb,  or  about  the  aver- 
age business  life  of  a  trader.  He  who  commences  busi- 
ness on  the  rising  tide,  may  find  that  the  calculations  he 
makes  of  losses  by  bad  debts,  founded  on  the  experi- 
ences of  others,  and  on  his  own  first  year  or  two  of  business 
w^ill  be  amply  sufficient  for  ten  or  fifteen  years!  And 
should  he  then  close  his  business  career,  his  experience 
would  indicate  a  very  moderate  percentage  of  loss.  Though 
possibly  should  he  continue  business  for  the  next  five  years 
following,  when  confidence  may  be  ebbing  and  all  values 
passing  through  a  condensing  process,  and  the  whole  busi- 
ness community  in  a  panic,  as  inl837,*57and'73,eachman 
suspiciously  doubting  the  solvency  of  every  other  one,  he 
would  have  to  more  than  double  the  average  of  his  former 
calculation  to  make  good  his  losses  by  bad  debts.  And 
be  fortunate  indeed,  if  the  losses  did  not  entirely  sweep 
away  the  profits  of  the  former  years,  although  these  pro- 
fits, at  the  end  of  the  fifteen  years,  might  have  been  ac- 
counted a  fortune. 

There  is  good  reason  to  think  that  these  periods  of 
speculation,  and  their  resultant  panic,  are  coeval  with  a 
new  generation  of  traders.  Those  who  speculated  so 
largely  from  1830  to  1836,  were  not  the  men  who  had 
gone  through  the  trying  times  of  the  war  of  1812,  and 
the  few  succeeding  years  to  1820 — a  period  that  history 
records  as  of  great  mercantile  peril.  At  the  later  period 
these  older  dealers  had  mainly  passed  off  the  stage  of  ac- 
tion, and  the  younger  ones  had  to  have  their  experience 
of  the  disastrous  results  of  speculation.    From  1845   to 


166       The  Risk  of  any  JRixed  Estimate  of  Loss, 

1856,  when  the  tide  was  running  up  again,  these  men  cf 
'36  had  passed  away,  or  the  few  that  still  remained  were 
regarded  as  "  old  fogies."  So  those  who  smBfered  the  anxie- 
ties and  losses  of  1857  to  1861  were  cautious  all  through 
the  inflation  from  1863  to  1870 ;  but  a  new  generation  of 
traders  was  then  coming  forward,  lacking  this  experience 
of  their  elders,  and  their  ambitious  desires  to  **  push  things  " 
brought  on  the  speculations  that  culminated  in  the  panic 
of  1 873.  We  need  not  expect  another  such  climax  and 
panic  while  these  are  the  prominent  men  in  business ;  but 
in  the  next  few  years,  with  a  new  generation  of  traders 
coming  on,  speculation  will  doubtless  rage  again,  to  culmi- 
nate by  1890  in  another  panic.  Like  the  girl  whose  mother 
had  "  been  to  balls  and  seen  the  folly  of  them,"  she  must 
also  go  "  to  see  the  folly  of  them."  So  the  sons  will  not 
heed  the  advice  of  their  fathers,  but  must  see  the  folly  of 
speculation  for  themselves. 

It  is  the  uncertainty  of  the  amount  which  may  be  lost 
by  crediting  out,  which  makes  the  credit  business  danger- 
ous. And  we  may  set  it  down  as  an  impossibility  for 
any  dealer  to  name  the  proximate  percentage  on  his  credit 
sales,  which  will  surely  cover  his  risk.  So  much  depends 
on  his  care  and  discrimination  in  giving  the  credit,  so 
much  on  his  promptness  and  skill  in  collecting  in  desper- 
ate cases,  or  those  likely  to  be  such,  that  it  requires  al- 
ways the  fear  of  loss  to  sharpen  his  wits  and  judgment. 
If  in  one  or  more  years,  through  exceeding  carefulness,  a 
dealer's  losses  are  so  limited  that  he  thinks  he  may  safely 
conclude  that  a  certain  percentage,  say  three  or  five  on  his 
sales,  will  cover  them  all,  such  a  conclusion  almost  surely 
relaxes  his  vigilance  the  succeeding  year,  and  his  losses 
jump  up  to  double  the  estimate.  In  deciding  upon  the 
propriety  of  giving  credit  in  actual  business,  there  is  al- 
ways a  struggle  of  two  opposite  influences  ;  one  the  de- 
sire to  make  money  by  the  sale,  the  other  the  fear  of  loss 


Changes  in  the  !Kespojistb*ti'ty  of  Customers,     167 

it  the  debtor  fails  to  pay.  The  judgment  should  faith- 
fully hear  both  sides,  and  then  determine.  If  the  fear  of 
loss  is  weakened  by  a  belief  that  the  three  or  five  per 
cent  hitherto  found  sufficient,  will  cover  any  loss  on  this 
special  transaction,  and  that  therefore  the  business  can  af- 
ford this  particular  risk,  the  dealer  will  find  that  he  is 
dispensing  credits  to  a  class  who  have  not  the*  responsi- 
bility those  had  to  whom  he  previously  gave  the  credit. 
Ordinarily  this  error  is  soon  corrected,  as  at  the  end  of 
the  year,  when  the  losses  are  found  to  exceed  previous 
calculatrons,  an  increased  influence  is  given  to  this  fear 
of  loss,  sometimes  so  great  as  for  a  period  to  induce  re- 
fusals of  credit  to  parties  well  worthy  of  it. 

Another  difficulty  which  the  retailer  has.  perhaps  \\i 
greater  degree  than  the  wholesale  dealer,  m  estimating 
the  extra  profit  he  must  make  to  cover  bad  debts,  lies  in 
the  varying  and  changing  responsibility  of  his  customers. 
He  cannot  decide  once  for  all.  The  man  who  was  good 
last  month  or  last  spring  may  be  bad  this  fall,  and  pos- 
sibly good  again  in  two  or  three  years.  He  must  keep 
his  eyes  and  ears  both  open,  and  at  the  recurrence  of 
each  sale  in  many  cases,  at  least  every  season,  review  his 
decisions  about  the  responsibility  of  his  customer.  Not- 
ing particularly  the  character  of  his  purchases,  his  habits, 
associations,  and  in  general  all  his  doings  and  misdoings, 
which  in  any  way  affect  his  responsibility,  or  serve  to 
make  him  less  desirable  as  a  credit  customer. 

Such  changes  occur  not  only  in  individuals,  but  often 
in  whole  communities  and  states.  One  class  goes  down, 
and  another  comes  up  to  supply  its  place,  or  perhaps  for 
a  long  time  none  other  comes  up.  It  may  be  short  crops 
for  a  series  of  years,  making  the  farming  population,  and 
all  Avho  depend  upon  it,  unsafe  to  credit ;  or  the  failure  of 
large  manufacturing  establishments,  throwing  out  of  em- 


168 


^Keeping  a  good  Look-out  for  breakers* 


ployraent  grjeat  numbers  of  operatives  ;  or  a  general  de. 
pression  of  business  throughout  the  whole  country,  the 
result  of  over  trading  and  speculation.  All  these  diffi- 
culties tend  to  make  the  path  of  the  retailer  who  sells  his 
goods  on  eredit,  a  dangerous  one.  There  are  but  few 
men  who  have  sufficient  prudence  and  caution  to  guard 
against  such  difficulties  and  dangers.  At  least  few  of 
them  who  will  embark  in  the  credit  business. 

The  most,  therefore,  that  the  credit  retailer  can  do,  is 
to  keep  the  best  reckoning  he  can,  and  to  try  to  have  his 
affairs  in  such  trim  that  if  he  sees  any  signs  of  an  ap- 
proaching storm  he  can  take  in  sail  quickly  and  meet 
it  with  as  little  exposed  to  risk  as  possible. 

To  the  watchful  mariner  there  are  many  signs  which 
indicate  an  approaching  storm,  and  he  often  thinks  it  pru- 
dent to  have  everything  prepared,  though  perhaps  no 
storm  really  does  break  over  him  at  the  time.  The  more 
rash  and  heedless,  care  nothing  for  the  dark  cloud  on  the 
horizon,  "  they  have  seen  the  like  before  without  bring 
ing  harm,"  and  they  crowd  on  sail  while  the  wind  is  free, 
till  the  tornado  comes,  that  sends  them  to  the  bottom ; 
while  the  prudent  .man  escapes  with  only  the  loss  of  a 
spar  or  two. 

The  opening  of  rival  stores  generally  tends  to  reduce 
the  sales  of  those  already  established,  and  this  reduction 
is  struggled  against  very  often  by  increased  liberality,  in 
giving  credit  to  those  who  were  before  not  thought 
worthy  of  it,  or  in  giving  it  more  freely  to  those  who  had 
only  a  limited  credit  before.  From  this  source  comes  an- 
other cause  of  the  variableness  of  the  loss  in  giving  credit. 
A  source  specially  to  be  guarded  against  as  very  insidious, 
and  one  whose  influences  are  not  quickly  seen.  The 
dealer  finds  the  same  names  on  his  books  as  customers, 
and  to  casual  inspection  the  outstanding  accounts  of  a 


Classl/ying  the  ^Jiisks  in  Crediting,         169 

later  period  are  as  valuable  as  the  same  amount  was  in 
the  former  years.  To  guard  against  this  danger,  it  is 
well  to  make  a  classification  of  the  debts  every  six  months 
at  least,  and  see  how  they  compare  with  former  years. 
A  retailer  who  at  the  end  of  a  season's  business,  might 
have  $10,000  due  him,  if  the  credit  has  been  carefully 
given  could  probably  make  a  classification  somewhat  as 
follows,  with  propriety : 

Class  A,  comprising  one-fourth  in  number  of  all  who 
are  credited,  owing  to  the  amount  of  $5,000,  on  which 
the  loss  will  be  one  per  cent,  or $50.00 

Class  B,  one  other  fourth  in  number,  owing  $3,000 
on  which  the  loss  will  be  two  per  cent,  or. ; . .       60.00 

Class  C,  one  other  fourth  in  number,  owing  $1,000, 
on  which  the  loss  will  be  five  per  cent,  or 50.00 

Class  D,  the  last  foiu-th  in  number,  owing  $1,000,  on 
which  the  loss  will  be  ten  per  cent,  or 100.00 

Total,  $10,000, loss, $260.00 

equivalent  to  an  average  of  two  and  six-tenths  per  cent. 
Suppose  his  business  to  be  $25,000  a  year,  and  he  fixes 
the  sum  of  two  and  six-tenths  per  cent,  as  a  fair  average 
increase  of  profit  to  cover  the  risks  of  loss  by  bad  debts. 
The  introduction  of  a  rival  store,  or  any  other  cause 
which  would  tend  to  draw  off  his  best  customers  in 
classes  A  and  B,  and  induce  them  to  buy  less  from  him,  and 
a  greater  liberality  in  crediting  the  weaker  ones  in  classes 
C  and  D,  to  make  up  the  amount  of  sales,  would  so  change 
the  character  of  his  accounts  that  at  a  later  classification 
he  will  likely  find  them  in  the  following  proportions  : 

Class  A  owe  now $1,000,  loss    1  per  cent,    $10.00 

B    "      "     1,000,    "      2        "  20.00 

C     "      "     3,000,     "      5        '"■         150.00 

D    «      "     5,000,    "    10        "  500.00 


(( 


«( 


(t 


Total. 


$10,000 
15 


Loss $680.00 


170 


Influences  Inipoverishinff  Customers 


Temptations  to  JE^xtend  Credits, 


171 


equal  to  six  and  eight-tenths  per  cent,  making  on  the 
years  business  of  $25,000  a  difference  to  the  dealer's  dis- 
advantage of  over  one  thousand  dollars,  though  the  same 
customers'  names  appear  on  his  books  as  before. 
\  This  subject  of  the  changing  responsibility  of  a  re- 
tailer's customers  is  one  which  hardly  ever  receives  the 
attention  it  requires.  It  frequently  occurs  that  some  cer- 
tain production,  in  a  particular  locality,  will  for  a  long 
time  give  pecuniary  responsibility  to  all  who  produce  it, 
and  then  after  a  time  it  ceases  to  be  profitable.  Either 
the  raw  material  becomes  exhausted — the  earth  refusing 
to  yield  as  heretofore,  or  it  is  found  in  greater  profusion 
and  more  advantageously  elsewhere ;  or  some  other  ar- 
ticle has  been  brought  into  use  which  supplies  its  place ; 
thus  making  the  cultivation  or  manufacture  of  it  in  that 
special  locality  less  profitable  than  previously.  On  ac^ 
count  of  this,  the  community  gradually  become  less  able 
to  keep  up  the  expenditure  they  have  before  indulged  in, 
and  the  retailer  who  furnishes  them  with  goods  on  credit 
is  compelled  yearly  to  advance  his  rate  of  profit  to  keep 
pace  with  his  increasing  losses  by  bad  debts.  On  the 
other  hand,  it  sometimes  occurs  that  other  localities,  which 
have  been  depressed,  are  raised  from  a  state  of  compara- 
tive poverty  to  one  of  competence,  often  to  affluence,  by 
the  fortunate  discovery  of  some  hitherto  undeveloped 
source  of  wealth,  or  by  the  adoption  of  some  other  means 
for  obtaining  a  livelihood  by  the  inhabitants. 

Whenever  a  dealer  is  tempted  by  the  falling  off  of  his 
sales  to  be  more  liberal  in  his  credits,  he  should  carefully 
review  the  position  of  the  business  of  the  neighborhood, 
and  see  whether  there  are  not  suflicient  causes  for  the  de- 
crease in  his  sales,  other  than  what  he  may  be  disposed 
to  think  his  extreme  caution  in  crediting.  And  if  he 
concludes  that  there  are  such,  either  -through  the  intro- 


duction of  rival  stores,  or  from  the  impoverishment  of 
many  of  his  customers,  it  will  be  better  for  him  to  cut 
down  his  expenses  to  the  reduced  measure  of  his  profits, 
while  this  state  exists,  or  if  the  depressing  causes  are 
likely  to  be  permanent,  to  seriously  consider  the  advan- 
tage of  a  change  in  his  business  or  a  removal  to  some 
other  locality.  Where  competition  is  the  main  cause  of 
the  decline  in  sales,  and  the  credit  dealer  finds  others 
around  him  underselling  him,  and  thus  drawing  away  his 
best  customers,  it  will  often  be  preferable  for  him  to  come 
down  also  in  price,  and  cut  off  some  of  the  C  and  D 
class  of  his  customers.  So  far  as  the  net  result  of  the 
business  is  concerned  at  the  end  of  the  year,  it  will  make 
but  little  difference  whether  he  does  this  or  is  more 
liberal  in  credits,  and  thus  gets  his  old  price.  As  the 
losses  by  his  liberal  credit  will  about  counterbalance  the 
reduction  in  profit  which  he  would  have  to  make  to  retain 
his  best  customers.  The  advantage  in  reducing  the  pro- 
fits is  that  the  dealer  knows  at  once  that  his  business  is 
not  so  profitable  as  before,  and  reduces  his  expenditures 
correspondingly,  while  in  extending  credits  the  hope  ever 
exists  that  as  he  still  tries  to  be  very  careful  in  crediting, 
the  losses  by  bad  debts  will  not  be  so  very  much  greater 
than  before,  and  he  continues  his  expenditures  on  the  for- 
mer scale,  at  least  to  tlie  end  of  the  year.  And  indeed 
is  apt  to  continue  them  longer,  for  by  this  time  he  has 
lost  sight  of  the  original  inducement  to  liberality  in  credit, 
and  has  now  to  spend  most  of  his  spare  hours,  not  i^ 
studying  economy,  but  in  managing  his  collections. 

Every  retailer  doing  business  on  credit,  will,  if  he  is 
prudent,  set  a  limit  to  the  amount  he  will  place  out  on 
credit.  This  limit  should  be  proportioned  to  the  caj^ital, 
having  also  somewhat   in   consideration   the   amount   of 


I 


172 


ZimlHng  the  Amouttt  Trusted  Out. 


gooda  required  to  furnish  the  assortment — taken  at  the 
period  of  the  year  when  the  quantity  is  least — and  the 
length  of  credit  obtained  on  the  dealer's  purchases  as 
compared  with  that  which  he  has  to  give  on  his  sales. 

Supposing  that  the  time  of  his  payments  is  fully  two 
months  later  than  the  average  of  his  outstanding  accounts, 
and  the  amount  of  stock  at  the  lowest  point  is  just  equal 
to  his  capital,  it  will  require  that  he  collects  every  dollar 
of  his  outstanding  accounts,  less  the  amount  of  his  net 
profits  on  the  same — within  two  months  after  they  fall 
due,  to  meet  his  own  payments  promptly.  But  there 
will  always  be  some  risk  in  his  collecting  these  in,  and 
hence  it  is  prudent  not  to  have  too  large  an  amount  out- 
standing. Twice  the  amount  of  the  actual  capital  should 
be  the  outside  limit  of  a  retailer's  venture  in  trusting 
out.  A  very  successful  retailer  that  the  writer  knows,  lim- 
ited his  outstanding  accounts  to  the  amount  of  his  capital. 
He  kept  a  running  memorandum  of  the  amounts  daily 
credited  and  paid  off,  and  when  the  balance  ran  up  to 
this  sum  he  stopped  crediting  and  sold  for  cash.  In 
entirely  a  credit  business,  the  limit  might  be  often  with 
profit  increased  to  double  the  amount  of  the  dealer's  cap- 
ital. If  a  dealer  sells  only  on  credit,  buying  on  six  months 
time,  and  selling  on  three  months,  and  trusts  out  not 
more  than  the  amount  of  his  capital  at  one  time,  he 
will  probably  sell  the  amount  of  his  stock  three  times 
over  in  a  year — making  due  allowance  for  the  time  the 
goods  are  on  hand  before  they  are  sold,  and  for  ordinary 
delays  in  collecting.  If  he  credits  out  twice  the  amount 
of  his  capital  under  the  same  conditions,  he  will  turn  his 
stock  over  possibly  five  times  in  a  year.  Of  course  the 
chance  for  making  money  will  be  much  greater  in  the  lat- 
ter case  than  in  the  former,  to  which  is  however  attached 
the  greater  risk  that  as  he  will  have  more  to  pay  he  may 


Accounts  that  are  Hard  to  Collect, 


173 


sometimes  he  unable  to  collect  or  raise  in  any  way  enough 
money  to  meet  his  obligations. 

If  however  the  dealer  has  capital  outside  of  his 
business  which  he  can  in  an  emergency  draw  on  to  pay 
his  obligations,  he  may  venture  further,  and  take  into 
consideration,  to  some  extent,  the  capital  he  has  outside. 
Though  there  is  no  way  that  capital  can  be  so  well  em- 
ployed in  a  credit  business  as  in  buying  for  cash,  yet  if  the 
dealer  has  outside  means  sufticient  to  surely  pay  his  debts, 
he  may  properly  trust  those  he  thinks  responsible,  to  any 
amount  he  chooses.    He  risks  only  his  own  money. 


A  great  deal  may  be  done  by  a  vigilant  trader  to  save 
himself  from  loss  by  looking  closely  after  the  debtor  after 
the  credit  is  given.  The  necessity  of  doing  this  takes  up 
a  great  deal  of  time,  and  is  really  one  of  the  drawbacks 
to  a  credit  business.  When  credit  is  given  it  should  al- 
ways be  for  some  specified  time,  or  what  is  the  same,  the 
debt  should  be  due  on  some  fixed  day ;  so  that  the  dealer 
may  kaow  when  to  ask  for  it,  if  it  is  not  promptly  paid. 
The  very  worst  kind  of  a  debt  to  collect  is  one  that  is  to 
be  paid  "  when  I  have  sold  my  wool  "  or  "  my  cotton," 
or  at  any  such  uncertain  period.  The  trader  not  wanting 
to  be  too  inquisitive,  and  not  knowing  exactly  when  to 
ask  for  the  money,  suffers  the  account  to  run  on ;  till  look- 
ing  over  his  accounts  on  some  "  rainy  day  "  he  concludes 
that  if  this  customer  has  not  sold  his  wool,  it  is  time 
he  had.     Sending  in  his  bill  therefore,  with  a  request  for 

payment,  he  receives  back  answer  that  Mr.  hasn't 

"  sold  his  wool  yet,  he  is  holding  it  for  a  better  price." 
Or  quite  as  likely  that  "  the  wool  was  sold  last  month, 
and  I  have  used  the  money ;  if  you  had  only  sent  in  this 
bill  then,  as  I  mentioned  when  I  bought  it,  I  could  liavc 
paid  it,  but  you  must  wait  now  till  I  have  sold  my  wheat." 


la 


174 


^dyantage  of  Trojnpt  Collection. 


Anecdote.  -  The  *'  Z^nUtck-y  lie  taller. 


»f 


175 


In  all  cases  when  a  customer  wants  to  buy  on  such  an 
indefinite  credit,  it  is  best  to  have  a  clear  understanding 
at  the  time,  as  to  when  the  event  is  to  occur ;  making  the 
credit  to  mature  on  a  day  certain  about  that  period.  The 
payment  being  understood  to  be  contingent  on  the  sale  of 
the  product.  Then  the  dealer  can  send  in  the  account  at 
the  time,  without  giving  offence,  and  if  the  product  is 
not  sold,  can  most  likely  ascertain  about  the  day  when  it 
will  be.  The  debtor,  too,  knowing  the  debt  is  due  at  a 
certain  day,  will  be  more  likely  to  bear  it  in  mind,  and  be 
prepared  to  meet  it  so  soon  as  he  gets  the  money  m  hand. 
The  dealer  who  is  on  the  look-out  for  circumstances 
Avhich  tend  to  weaken  the  debtor's  ability  to  pay,  and  is 
prompt  to  avail  himself  of  the  knowledge  he  may  thus 
obtain,  can  very  often  save  a  debt  by  obtaining  either 
some  property  or  a  claim  against  a  third  party  which  the 
debtor  may  possess.  While  if  the  matter  is  delayed  un- 
til tlie  debtor  is  completely  prostrate,  there  is  but  little 
chance  of  accomplishing  this.  It  rarely  ever  happens  that 
the  debtor  of  the  retailer  goes  down  suddenly.  There 
is  ordinarily  a  period  of  struggling,  more  or  less  lengthy 
—say  from  one  to  six  months,  during  which  the  debtor 
thinks  he  will  soon  be  all  right  again.  And  it  is  during 
this  period,  and  early  in  it,  that  the  retailer  should  make 
up  his  mind  as  to  the  ultimate  fate  of  the  debtor,  and 

promptly  act. 

A  conversation  which  occurred  many  years  ago  in  the 
author's  presence,  between  two  retailers,  who  were  down 
to  New  York  to  buy  goods,  illustrates  the  advantage  ot 
this  watchfulness.  The  parties  were  both  from^  the 
same  town  in  one  of  the  western  counties  of  New  York. 
For  sufficient  reason  their  true  names  are  not  given,  but 
thev  may  be  called  Mr.  Smith  and  INIr.  Jones. 

It  was  near  the  close  of  an  active  day's  occupation  that 


thoy  met,  and,  as  traders  are  wont  to  do,  commenced 
talkinc:  over  the  events  of  the  da  v. 

Smith  remarked  *'  that  he  liad  sold  to-day  eighteen 
dollars  of  the  bills  of  the  Chickasaw  Bank,  (a  broken 
shinplaster  concern,)  which  he  had  received  in  business, 
and  had  in  hand  when  tlie  bank  f^iiled ;  getting  only 
twenty  cents  on  the  dollar  for  them.  lie  tliought  there 
should  be  some  law  to  punish  people  Avho  issued  such 
money  to  swindle  the  community.  He  was  sure  his  losses 
that  way  were  full  fifty  dollars  a  year,"  appealing  to 
Jones  to  verify  that  as  the  least  that  retailers  lost  in  that 
part  of  the  country  yearly  by  broken  bank  bills. 

Jones  said  "  he  did  not  know  how  it  was  with  others, 
but  for  his  part  he  did  not  lose  much  that  way.  lie  had 
only  two  dollars  of  the  Chickasaw  Bank  when  it  failed, 
and  he  sold  them  the  same  day  at  fifty  per  cent  loss." 

"  Well,  I  declare,"  replied  Smith,  "  you  are  one  of  the 
luckiest  fellows  I  ever  knew.  It  seems  to  me  you  always 
escape  when  others  lose." 

**  Do  you  think  so?  Well,  I  don't  know,  I  have  my 
share  of  losses.  Perhaps  not  so  many  as  some  others, 
but  more  than  I  like.     At  least  I  don't  sec  my  luck." 

"  That  is  because  you  don't  look,  then.  I  can  mention 
half-a-dozen  instances  where  nothing  but  luck  saved  you 
from  losing.  Now,  here  is  this  Chickasaw  Bank  for  one. 
There  was  Judge  Marvin's  widow  that  turned  out  so 
poor.  We  both  sold  her  a  great  many  goods  while  the 
Judge  lived,  for  they  had  a  large  family.  Everybody 
tliought  that  the  Judge  left  a  fine  proj^erty.  She  owes  me 
now  a  bill  of  over  three  hundred  dollars,  and  as  it  turns 
out  the  estate  will  just  about  pay  the  Judge's  debts, 
leaving  nothing  for  the  widow  and  children.  I  heard  she 
didn't  owe  you  anything  now,  though  the  Judge  paid  you 
hundreds  of  dollars  for  goods  in  his  lifetime.     And  there 


176 


The  One  n^ho    Ifas  *^ Ziicky. 


>f 


is  Phin  Jackson,  seemingly  as  industrious  a  carpenter  as 
ever  lived.  I  shall  lose  a  hundred  dollars  by  his  failure. 
You  not  a  cent,  though  he  traded  with  you  twice  as  much 
as  with  me.  And  that  young  Doctor  Vogel,  who  came 
to  our  place  last  year  and  recently  left ;  another  one  hun- 
dred and  fifty  dollars  gone  with  him.  I  heard  he  didn't 
owe  you  anything,  but  how  it  could  be  except  for  your 
known  luck  I  can  not  understand.  For  I  know  he  brought 
letters  of  introduction  to  you  when  he  came,  and  you 
eaid  he  was  very  highly  recommended,  besides  he  seemed 
doing  a  good  business.  I  could  mention  other  cases  that 
occurred  within  a  year,  of  smaller  amounts,  where  I  suf- 
fered much  heavier  than  you  did.  Then  there  was  that 
Brooker  lot,  on  which  you  had  the  $1,000  mortgage,  and 
afterward  bought  for  $1,200,  now  only  two  years  ago ; 
and  it  is  now  worth  $5,000.  Was  not  that  clear  luck  ? 
Who  would  have  supposed  that  the  railroad  would  have 
been  laid  on  that  side  of  the  town.  You  and  I  started 
pretty  nearly  equal.  I  think  I  had  a  little  the  most  cap- 
ital, but  I  can't  keep  up  with  you.  The  luck  is  always 
on  your  side." 

"  I'm  sure,"  said  Jones,  "  I  never  looked  at  it  in  that 
way.  It  may  be  as  you  say,  but  it  seems  to  me  that  I  aU 
ways  got  out  by  watching  for  the  opportunity.  About 
that  Chickasaw  Bank — I  did  with  that  as  I  always  do 
with  such  trash,  which  is  known  by  everybody  to  be  dan- 
gerous— only  take  what  the  bank  will  take,  and  send  a 
boy,  sometimes  two  or  three  times  a  day,  to  sell  it,  never 
keeping  it  over  night  if  I  can  possibly  avoid  it.  I  cannot 
well  refuse  to  take  it,  so  long  as  others  do.  but  it  does 
not  gain  much  credit  with  me.  I  never  receive  even  one 
dollar  of  such  money  without  warning  my  customer  of 
its  dangerous  character.  You  knew  its  character  as  well 
as  I  did,  but  still  you  kept  the  notes  accumulating  iu 


The   Way  the  ''  Zuck'*  Happened, 


177 


your  pocket  book  instead  of  selling  them  at  once. 

Then,  as  to  those   debtors,   most  of  them  owed  me, 
but  I  collected  my  money  by  looking  out  sharply.    I  al- 
ways thought  Judg£  Marvin's  wealth  over-estimated,  for 
I  knew  his  living  expenses  must  be  more  than  his  salary, 
and  he  was  often  a  little  behind  in  paying— a  matter  of 
not  much  consideration  in  a  customer  who  is  in  a  busi- 
ness from  which  the  income  is  always  varying,  but  always 
important  to  be  noticed  in  the  case  of  a  customer  living 
on  a  regular  income.     I  sold  the   mournirig  to  the  family 
at  the  Judge's  death,  and  fearing  that  the  estate  would  be 
found  deficient  I  sent  the  bill  in  promptly,  and  finding  it 
was  not  paid,  I  began  to  be  anxious  about  it,  though  I 
think  the  widow  supposed  there  was  a  fair  estate  left.     I 
purposely  threw  myself  in  her  way  a  few  days  after,  when 
she  mentioned  that  she  wished  to  dispose  of  a  pair  of 
horses,  and  so  soon  as  she  did  would  pay  me.     On  this 
hint  I  acted  and  soon  found  a  customer  for  her,  and  so 
got  the  money.     I  did  not  afterward  ask  her  to  buy,  and 
of  course  I  had  no  occasion  to  refuse  credit.    I  declined  to 
credit  Phin  Jackson  six  months  ago ;  the  last  bill  he  owed 
me  I  had  to  get  some  carpenter  work  done,  which  I  did 
not  pressingly  need,  to  get  my  pay.     Phin  was  honest 
and  industrious  enough,  but  he  had  not  the  capacity  to 
conduct  business.     I  knew  that  he  must  be  losing,  ov  at 
least  not  making  anything,  on  most  of  the  contracts  he 
undertook.     As  for  Dr.  Vogel,  though  he  promised  well 
at  first,  I  saw  that  he  had  the  extravagant  habit  of  spend- 
ing more  money  than  he  was  eaniing,  even  though  his 
business  seemed  to  be  good.     As  he  had  no  family  to  tie 
him  to  the  locality,  I  did  not  think  it  prudent  to  trust 
him  to  any  great  amount. 

And  about  the  lot  you  speak  of,  you  remember  I  had  a 
mortgage  on  it  of  $1,000,  which  I  lent  Brooker  the  sanie 


178 


^n  Operatio7i  in  ^eal  J^state. 


summer  you  added  a  new  wing  to  your  house.  I  had  the 
intention  of  adding  an  additional  story  to  mine,  and 
had  laid  by  the  money  for  that  purpose,  but  Brooker  be- 
ing in  such  great  need  for  the  money,  I  lent  it  to  him  for 
one  year,  thinking  it  would  answer  to  make  the  improve- 
ment to  my  house  a  year  later  just  as  well.  When  the 
year  came  round  Brooker  could  not  pay  me,  and  wanted 
me  to  buy  the  lot  out  and  out,  to  save  him  from  the  mor- 
tification of  a  foreclosure,  offering  it  at  $1,200.  I  con- 
cluded to  take  it,  but  found  myself  but  little  better  off 
after  I  got  it,  for  it  yielded  no  income.  I  reflected  very 
often  over  the  venture,  and  what  I  could  do  to  make  it 
available,  and  finally  thought  if  I  could  only  get  the 
railroad,  which  was  then  projected  to  run  on  the  other 
side  of  the  town,  to  come  on  this  side,  it  would  much  en- 
hance the  value  of  this  lot.  I  knew  that  the  engineers 
had  made  their  report,  but  learned  that  the  directors  of 
the  road  had  not  definitely  decided  upon  the  route.  So  I 
went  to  work  with  all  the  arguments  and  influences  I 
could  bring  to  bear,  to  induce  them  to  change  tliis  much 
of  it,  with  what  success  you  know.  And  I  do  not  see 
what  there  was  of  luck  about  it,  or  about  any  of  the 
other  transactions  you  mention.  I  have  always  found 
that  when  I  wanted  any  debt  collected  or  other  thing 
done,  I  had  to  go  to  work  and  do  it,  and  if  1  did  not  the 
"  luck,"  as  you  call  it,  was  against  me." 

There  are  but  few  instances  of  retail  business  done 
solely  on  credit,  the  most  of  them  being  a  combination  of 
cash  and  credit,  and  as  the  other  questions  or  considera- 
tions of  the  credit  system  have  to  be  examined  in  con- 
nection with,  and  in  reference  to  the  accompanying  cash 
sales,  this  chapter  will  be  closed  by  referring  the  reader 
to  the  next  one,  which  is  to  some  extent  a  continuation 
of  this,  where  a  combined  cash  and  credit  business  will 
be  considered. 


CHAPTER   XII. 

BELLING   FOE  CASH   AND   CREDIT  COMBINED. 

AS  the  retail  business  is  conducted,  it  is  almost  impos- 
sible to  do  an  exclusive  cash  business,  and  as  every  dealer 
doing  business  on  the  credit  system  is  desirous  of  sell- 
ing as  many  goods  for  cash  as  he  can,  it  follows  that  prac- 
tically all  retailing  is  more  or  less  a  combination  of  both 
cash  and  credit  sales.  This  combination  has  its  common 
division  into  two  classes ;  one  where  the  business  is  ar- 
ranged on  a  cash  basis,  and  the  credit  is  limited,  stringent 
and  subordinate;  and  the  other  where  the  business  is 
based  mainly  on  the  credit  sales — the  cash  transactions 
forming  the  lesser  item  in  the  aggregate.  Although 
to  some  readers  it  may  seem  desirable  to  discuss  the  sub- 
ject in  more  variety  than  in  these  two  aspects,  I  am  per- 
suaded that  what  can  be  said  on  these  two  views  will 
cover  and  embrace  all  gradations  or  intermediate  pro- 
portions. It  will  make  but  little  diflference  whether  the 
relative  proportion  of  cash  sales  in  a  credit  business  be 
one-tenth,  one-sixth  or  one-third,  the  principles  governing 
the  business  are  the  same,  the  risks  only  varying  in  their 
degree,  the  influence  of  which  variation  the  reader  will 
be  able  to  estimate. 

Whatever  shall  be  the  vague  expectation  or  calculation 
of  a  person  commencing  business,  in  regard  to  the  pro- 
portion of  cash  and  credit  business  he  will  do,  it  is  always 
of  great  importance  that  this  probable  i)roportion  be  made 
a  matter  of  some  study,  and  that  definite  conclusions  be 
reached.    That  is,  if  the  main  portion  of  the  business  is 


i 


h«1 


180        Hclatiye  j)roportion  of  Cash  and  Credit, 

to  be  cash,  and  it  is  decided  that  something  may  be  pro- 
fitably sold  on  credit,  which  will  not  be  sold  if  the 
credit  is  not  given,  then  that  amount  should  be  made  a 
definite  proportion,  which  ought  not  be  exceeded.  It  is 
necessary  that  this  is  decided  with  some  exactness  be- 
fore the  proper  calculation  can  be  made  of  the  gross  pro- 
fits to  be  be  marked  on  the  goods.  Selling  for  credit  be- 
ing really  only  another  way  of  selling  at  less  price.  This 
less  price  will  range  from  one  to  ten  per  cent,  according 
to  the  length  of  credit,  or  loss  of  interest — the  risk,  or 
loss  by  bad  debts — and  the  additional  expense  incurred 
in  keeping  books,  making  out  bills  and  dimning  and  col- 
lecting. 

Probably  the  great  majority  of  people  in  the  retail 
business  have  never  considered  the  relative  proportion  of 
their  cash  and  credit  sales.  Their  only  aim  or  concern 
being  to  sell  as  many  goods  as  they  can,  both  for  cash 
and  on  credit.  Although  as  a  principle,  this  is  a  bad  one, 
Or  indeed  is  no  principle  at  all,  still  where  there  is  no 
competition,  or  where  the  competitors  all  transact  their 
business  in  the  same  way,  the  dangerous  tendencies  of  the 
plan  are  not  likely  to  be  seen.  The  profits  being  rated 
on  the  goods  rathei*  by  the  experience  of  the  results  of 
years,  than  by  actual  calculation  of  the  amount  required 
to  produce  under  certain  circumstances  certain  results. 

But  let  us  consider  the  eflfect,  when  such  a  business — 
say  equally  divided,  one-half  cash  and  one-half  credit — 
encounters  the  competition  of  a  new  dealer,  who  sells 
only,  or  mainly  for  cash.  As  he  would  not  incur  the 
losses  and  expenses  of  the  credit  on  one-half  his  sales,  he 
could  afford  to  sell  his  goods  cheaper  than  the  old  dealer, 
by  whatever  he  saved  in  this  way,  and  yet  make  just  as 
good  a  net  ])rofit.  All  other  things  being  equal,  the  new 
house  would  soon  attract,  by  the  lower  prices,  the  cash 


!DifficMlty  of  Maintaining  the  l^roportion.     181 

trade  of  the  old  one,  which  is  the  profitable  portion  of 
the  old  dealer's  trade.  If  the  latter  tries  to  retain  this 
trade,  by  putting  down  the  prices  of  his  goods,  as  he  may 
probably  do,  the  result  will  be  a  loss  on  the  part  of  the  trade 
that  is  done  on  credit.  Should  he  try  to  make  up  for  the 
loss  of  cash  sales  by  increasing  the  credit  sales,  still  he 
must  lose,  and  the  year's  business  will  show  a  deficiency 
by  precisely  the  loss  of  interest,  bad  debts,  etc.,  from 
this  increased  credit  sale. 

The  dealer  who  sells  his  goods  ^t  the  same  price  for 
cash  or  credit,  without  definitely  basing  his  business  on 
either  the  cash  or  credit  plan,  is  placed  in  this  dilemma 
by  the  introduction  of  the  severe  competition  of  a  cash 
dealer  ;  either  he  must  reduce  his  rate  of  profit,  to  retam 
his  cash  trade,  or  be  more  liberal  in  giving  credit,  so  as 
to  increase  his  credit  trade,  the  latter  being,  as  before  re- 
marked, only  another  way  of  doing  the  former.  If  he  docs 
the  first,  he  soon  finds  that  he  cannot  afford  to  run  the  risks 
in  crediting  as  heretofore,  consequently  is  more  stringent 
in  granting  credit,  and  thus  loses  a  portion  of  his  credit 
trade,  while  if  he  adopts   the  other  alternative,  and  is 
more 'liberal  in  his  credits,  he  soon  finds  it  necessary  to 
increase  his  gross  profits,  which  in  turn  only  tends  more 
and  more  to  drive   away  his  cash  trade.     By   the  first 
course  the  business  gradually  works  into  a  cash  one,  with 
a  small  portion   of  credit;  by  the  second  into  a  credit 
business,  with  a  lessened  amount  of  cash  trade. 

Under  such  circumstances,  it  should  be  a  grave  consid- 
eration with  the  old  dealer,  which  course  he  will  adopt ; 
whether  there  is  sufficient  cash  trade  in  the  locahty  to 
sustain  him,  or  whether  the  credit  system  with  larger 
gross  profits,  gives  better  promise. 

To  guard  against  the  risks  which  every  dealer  domg  a 
combmed  cash  and  credit  business  continually  incurs,  of 

16 


5' 


I! 


182   Influe7ices  Turning  Cash  into  Credit  trade, 

the  undue  increase  of  the  proportion  of  the  credit  sales, 
as  also  to  record  tlie  facts  as  the  basis  of  future  calcula^ 
tions  and  comparisons,  it  is  very  desirable  that  the  daily 
account  of  sales  should  show  how  much  is  sold  for  cash, 
and  how  much  on  credit,  summing  them  up  from  week  to 
week  and  month  to  month  throughout  the  entire  year. 
Only  in  this  way  can  the  amount  of  the  credit  sales  be 
readily  and  positively  known  and  kept  within  their  pro^ 
per  limit. 

Circumstances  are  continually  occurring  stealthily  in- 
fluencing a  retailer's  business  in  this  respect,  and  unless 
he  is  particularly  on  his  guard  against  these  influences,  he 
will  fall  behind.     Scarcely  an  event  can  happen  in  a  local- 
ity without  affecting  for  good  or  ill  the  retailer's  sales. 
The  opening  of  a  railroad,  even  a  considerable  reduction 
in  the  fare  on  one  long  in  use  ;  the  establishment  of  a 
line  of  steamboats  or  stages,  all  giving  access  to  some 
larger  town  in  his  vicinity,  more  conveniently   or  more 
cheaply,  will  frequently  draw  off"  a  large  number  of  cash 
customers.    The  trade  in  many  of  the  small  towns  and 
villages,  in  the  vicinity  of  a  large  city,  is  often  much  re^ 
duced  by  such  circumstances.     The  stopping  of  work  in 
large  manufactories,  the  failures  of  crops,  and  other  like 
causes— some  operating  at  times  very  slowly— will  en^ 
tirely  change  the  character  and  profitableness  of  a  busi- 
ness in  any  locality ;  even  without  the  establishment  of 
rival  stores,  events  which  are  ordinarily  conspicuous  enough 
to  be  fully  appreciated  in  their  influence,  in  reducing  the 
sales  of  older  established  houses. 

When  the  dealer  who  finds  his  cash  sales  falling  oflT,  can 
arrive  at  the  true  reason  for  it,  he  is  in  a  fair  way  to  sur- 
mount his  danger.  Sometimes  this  falling  off  may  arise 
from  a  temporary  scarcity  of  money  among  his  customers, 
who  are  still  respoasible  and  will  soon  be  in  funds.     iJ 


ffow  they  may  he  met. 


183 


such  a  case  he  can  with  great  propriety  increase  his  credit 
line  temporarily,  taking  care  at  the  same  time  to  increase 
his  profits  commensurately  with  the  increased  credit 
sales.  If,  however,  it  arises  from  an  actual  impoverish- 
ment of  the  community,  from  such  causes  as  previously 
mentioned,  or  others,  as  indeed  is  most  frequently  the 
case,  it  is  not  probable  that  increasing  the  credit  sales 
will  help  the  dealer.  The  loss  has  to  be  submitted  to, 
and  expenses  reduced  accordingly,  or  some  addition  made 
to  the  business,  of  goods  not  before  kept.  If  the  impov- 
erishment is  likely  to  be  permanent,  then  the  question 
will  come  up,  as  to  whether  a  change  to  some  more  pros- 
perous locality  is  not  desirable. 

When  the  loss  of  cash  trade  has  occurred  through  the 
competition  of  dealers  in  a  larger  town  in  the  near  vi- 
cinity, through  the  increase  of  facilities  of  travel,  it  will 
frequently  be  found  good  policy  to  remove  to  the  larger 
town.  The  trader  can  naturally  anticipate  that  many  of 
those  who  are  his  customers  in  the  old  locality  will  patron- 
ize him,  whenever  they  go  to  the  larger  town  to  buy. 

When  the  accounts  of  cash  and  credit  sales  are  not  kept 
separately,  as  herein  recommended,  it  is  almost  impossi- 
ble that  the  dealer  can  see,  at  any  early  period,  the  evil 
results  of  such  influences  as  are  enumerated.  While  the 
combined  daily  or  weekly  sales  foot  up  to  the  same 
amount  as  before,  the  dealer  continues  on  well  satisfied. 
For,  as  before  remarked,  almost  always  the  first  effort  to 
increase  sales  which  are  falling  off,  is  by  a  more  liberal 
credit — in  fact  offering  credit  to  those  who  would  buy 
ibut  have  not  the  money.  No  increase  of  gross  profit  is 
thought  of,  however,  to  cover  the  extra  loss  he  will  be 
subject  to ;  all  he  looks  to  for  the  time,  is  to  see  that  at 
the  end  of  the  day  his  sales  are  as  much  as  heretofore. 
He  does  not  notice  that  his  business  is  gradually  cbang- 


184 


''Sard.  Times," 


ing  more  into  a  credit  one.    By  and  by  there  is  not  so 
much  cash  received,  and  the  dealer  begins  to  be  short  of 
money  to  pay  his  bills.     He  looks  back  to  the  time  when 
he  always  had  money  in  advance  of  his  requirements,  and 
realized  a  considerable  profit  from  anticipating  his  pay- 
ments.    Now  he  has  to  pay  interest  often,  and  the  interest 
account,  if  he  keeps  one,  shows  monthly  an  increasing 
balance  on  the  debit  side.     The  times  seem  "  hard  "  with 
him,  and  with  his  customers.     Whenever  he  buys  goods, 
he  feels  the  necessity  of  trying  to  get  a  little  longer  credit 
on  his  purchases,  not  that  he  may  obtain  a  greater  dis- 
count, by  anticipating  payment,  but  that  pay-day  may  be 
further  off.     He  scarcely  thinks  it  worth  while  to  even 
look  at  the  greatest  bargains  that  are  offered  him  for  cash 
down,  as  he  can  not  spare  the  money  to  pay  for  them. 
He  is  quite  at  a  loss  to  account  for  his  want  of  prosperity. 
His  annual  sales  are  nearly  as  great  as  ever,  and  he  hopes 
that  soon  "  times  will  be  better." 

At  the  end  of  the  year  he  is  surprised  to  see  how  much 
he  has  outstanding,  and  thinks  that  if  he  could  only  col- 
lect it  all  in,  it  would  relieve  him.  He  still  reckons  on 
his  accounts  as  all  good,  and  can  show  a  fine  .profit  on 
paper  for  his  year's  business. 

The  new  year  is  begun  with  some  energy.  He  sets  to 
work  earnestly  to  collect  in  his  bills,  and  promises  him- 
self to  be  more  cautious  in  trusting  out  his  goods.  But 
as  the  year's  trade  opens,  he  finds  that  if  he  would  keep 
up  to  the  amount  of  his  sales,  he  must  not  be  too  strin- 
gent in  his  credits.  As  he  turns  over  the  leaves  of  his  led- 
ger he  sees  that  the  names  of  most  of  his  old  and  best 
customers  still  remain  on  his  books,  but  fails  to  notice 
that  they  do  not  buy  more  than  half  as  much  as  formerly, 
and  that  that  half  is  mainly  composed  of  those  staple  and 
leading  articles  on  which  there  is  never  much  profit.     If 


The  ^ock  on  which  some  beginners  Split,    185 

he  does  not  collect  much  cash  from  the  others,  he  con- 
soles himself  with  the  belief  that   "  there  is  not  nmch 
cash  stirring."  And  thus,  while  going  on  m  Ins  fancied  se- 
surity-doing  business,  as  he  thinks,  in  the  same  way  he 
did  it  years  back,  when  he  did  make  money-he  is  all  the 
while  losing  money  from  selling  his  goods  too  cheaply- 
too  cheaply  for  the  pay  he  getsv-which  is  not  now    as  m 
times  past,  three-fourths  cash   down,   but  three-fourths 
trusted  out,  and  to  such  men  that  he  loses  five  or  ten  per 
cent  or  more  of  it,  in  bad  debts,  beside  another  five  per 
cent  in  interest  and  extra  expenses.    He  may  be  esteem- 
ed a  fortunate  man,  who  having  got  into  such  a  position 
from  inattention  to   one  of  the  positive  dangers  of  all 
dealers  doing  a  mixed  trade  of  cash  and  credit,  notices 
the  cause  of  the  difficulty,  and  extricates  himself,  with 
no  oreater  loss  than  two  or  three  years  profits. 

Hundreds  continue  on  in  just  such  positions,  until 
overtaken  by  bankruptcy,  oftentimes  again  and  agam,  be- 
fore they  fully  learn  the  lesson  that  deficiencies  of  cash 
sales  can  not  be  made  up  by  increasing  credit  sales,  un- 
less an  extra  profit  is  obtained. 

This  is  the  rock  on  which  many  have  struck  and  foun- 
dered  who  started  off  with  most  brilliant  prospects,  find 
did  a  profitable  cash  business  for  the  first  two  or  three 
years  of  their  career.  As  they  became  acquainted  more 
intimately  with  their  customers,  they  yielded  too  easily 
to  the  temptation  to  give  credit  to  them,  either  to  in- 
crease  their  sales,  or  to  accommodate  the  customei-^  t  or- 
cetting  that  often  people  buy  in  a  cash  house,  because 
they  have  no  credit,  and  are  not  worthy  of  one. 

If  we  were  to  critically  examine  the  details  of  such  a 
business,  where  goods  are  sold  at  the  same  price  indis- 
criminately for  cash  and  on  credit,  we  would  generally 
find  that  all  the  profits  are  from  the  cash  sales,  and  that 


186 


IUust?-ation  of  a  Mixed  business. 


the  credit  part  of  the  business  does  not  yield  profit  enough 
to  support  itself;  and  that  those  who  pay  cash  have  to  con- 
tribute by  the  extra  price  they  pay,  towards  supporting 
the  credit  branch  of  the  business.     There  is  morally  a 
serious   objection   to   the  system  in  the  injustice  which 
takes  advantage  of  the  necessities  of  the  cash  buyer,  and 
makes  him  pay  the  same  price   for   an  article   that  his 
neighbor  pays  who   has   six  months  credit   on  it,  (and 
sometimes  entirely  fails  to  pay  for,)  and  when,  too,  the  cash 
buyer,  as  is  often  the  case,  is  only  one  because  he  is  poor, 
and  has  not  the  responsibility  requisite  to  obtain  a  credit. 
Added   to  which   there  is   the  objection  to  it,  that  it  is 
against  correct  business  principles,  and  will  not  stand  the 
test  of  competition,  or  even  the  ordinary  vicissitudes  of 
business  affairs  in  the  community  among  which  it  finds 
its  advocates  and  customers. 

Such  a  business  may  be  perhaps  more  clearly  illustrat- 
ed to  the  reader  by  supposing  a  dealer  to  keep  two  stocks 
of  goods  in  two  separate  storehouses  in  the  same  local- 
ity,  say  side  by  side,  with  exactly  the  same  goods    in 
each,  the  prices  alike  in  both,  in  one  of  which  the  goods 
are  all  sold  for  cash,  and  in  the  other  all  sold  on  credit, 
of  an  average  of  six  months.     Now  the  profits  may  be 
so  adjusted  by  the  experience  of  the  results  of  former  en- 
terprises, that  the  two  stores  together  will  yield  a  satis- 
factory return  or  net  profit,   while  the  accounts  of  each 
if  kept  separate,  would  show  that  there  is  very  little  if 
any  net  profit  in  the  credit  branch  after  due  allowance 
is  made  for  the  losses  by  bad  debts  which  will  occur  in 
the  average  of  a  series  of  years. 

A  business  of  this  kind  would  not  disclose  its  defects, 
while  it  has  only  the  competition  of  rival  dealers 
selling  their  goods  in  the  same  way,  at  one  price  for  cash 
or  on  credit,  for  the  rival  dealers  will  have  no  advautaffe. 


Circumstances  which  Overturn  CalcutatioJts,   187 

And  so  long  as  the  cash  buyers  can  not  buy  more  advan- 
tageously, and  are  taxed  everywhere  to  support  credit 
systems,  they  will  as  readily  purchase  of  one  as  another, 
all  other  conditions  being  equal. 

But  in  the  event  of  a  rival  springing  up,  sellmg  exclu- 
sively for  cash,  or  nearly  so,  as  he  will  not  have  the  bur- 
den  of  the  credit  branch  of  the  business  on  his  shoulders, 
on  which  half  the  capital  and  more  than  half  the  time 
and  attention  of  the  supposed  dealer  are  bestowed  with- 
out remuneration,  he  can  afford  to  sell  his  goods  at  less 
prices,  and  make  in  the  end  as  great  net  profits.     His 
lower  prices  would  naturally  draw  customers  from  the 
cash  store  of  the  supposed  dealer,  and  reduce  that  branch 
of  the  business,  and  of  course  very  materially  reduce  the 
profits  on  the  whole  business.     And  he  must  either  en- 
hance his  prices  to  make  his  credit  store  profitable,  and 
thus  lose  more  of  his  cash  trade,  or  he  must  reduce  the 
prices   and  cut  off  his  credit  trade.     The  true  busmess 
course  would  be  to  reduce  the  prices  in  the  cash  branch, 
and  increase  the  prices  in  the  credit  one,  until  the  proper 
equilibrium  is  obtained. 

Somewhat  similar  would  be  the  results  on  the  profits  of 
such  a  supposed  double  business,  if  any  changes  were  to 
occur  in  the  business  of  the  neighborhood,  through  which 
the  cash  customers,  for  want  of  money,  cease  to  buy  in 
the  cash  store,  and  trade  subsequently  in  the  credit  branch. 
Although  the  same  amount  of  goods  might  be  sold,  and 
outwardly  and  on  a  superficial  view,  the  joint  business 
would  seem  profitable,  yet  it  would  really  be  languishing 
from  time  to  time,  in  proportion  as  the  cash  trade  turns 
into  the  credit  branch. 

This  is  really  the  course  which  a  mixed  business  of 
credit  and  cash  takes  when  carried  on  in  one  store.  Ac- 
tive competition  requires  that  the  business  must  merge 


188       Making  deduction  in  ^^ice,for  Cash, 


either  into  a  cash  one  with  goods  at  reduced  prices,  or 
into  a  credit  one  when  increased  prices  are  necessary  to 
make  it  as  profitable  as  heretofore. 

It  is  very  rarely  indeed  that  the  proprietor  of  a  retail 
store  can  make  a  difference  in  prices  for  cash  or  on  credit. 
If  these  differences  were  made,  the  credit  buyer  would 
always  want  to  buy  at  the  cash  price,  and  though  he  had 
not  the  money  to  pay  down,  he  would  "  hand  it  in  to- 
morrow," or  "  next  week,"  and  soon  the  dealer  would 
find  that  he  had  charged  his  goods  on  his  books  at  cash 
prices,  and  yet  did  not  get  the  pay  for  them  either  "  to- 
morrow "  or  "  next  week,"  and  frequently  not  for  six 
months.  The  next  result  would  be,  that  as  the  dealer  pur- 
chases new  goods,  he  is  tempted  to  mark  them  a  little  higher 
ill  price,  to  cover  this  risk,  and  so  as  to  be  ready  to  meet 
the  customer  who  wants  to  buy  for  cash,  yet  takes  three 
or  six  months  to  pay,  on  equal  terms.  And  he  is  thus 
soon  again  where  he  started  from,  with  his  goods  all  at 
one  price. 

The  only  way  that  a  mixed  business  can  be  done  at  re- 
tail, giving  to  the  cash  customer  the  advantage  which  he 
justly  should  have,  is  in  the  way  that  it  is  done  in  the 
wholesale  business :  by  giving  the  payer  of  cash  a  dis- 
count, when  payment  is  made,  equal  to  the  fair  difference 
between  cash  and  credit.  This  of  course  requires  that 
the  goods  shall  all  be  marked  and  sold  at  the  compara- 
tively higher  credit  prices,  which  in  turn  again  has  some 
disadvantage  in  the  actual  sale  of  the  goods.  Many  peo- 
23le  would  not  stojD  to  enquire  how  much  the  discount  off" 
for  cash  is,  and  it  is  found  in  experience  that  to  the  mul- 
titude ninety-five  cents  in  cash,  looks  cheaper  than  one 
liundred  cents  on  credit  subject,  if  paid  at  once,  to  five 
per  cent  discount.  Every  quotation  of  prices  will  be 
to  the  disadvantage  of  the  credit  house,  except  where  in 


'Rate  of  ^(ffere7ice. 


189 


rare  mstances  it  may  be  mentioned  that  there  is  a  dis- 

count  for  cash.  . 

The  reduction  of  a  discount  off  for  cash  would,  it  is 
true,  be  sometimes  difficult.  The  very  minute  transac 
tions,  usual  to  such  dealings,  would  make  calculations 
of  discount  descend  to  fractions  of  values  below  the  or- 
dinary  currency  used  in  making  payments.  But  there 
are  many  varieties  of  retail  business  in  which  such  a  dis- 
count  could  be  appropriately  made.  In  others  it  might 
be  limited  to  purchases  of  a  dollar  and  upward  made  at 

one  time. 

Five  per  cent  is  the  ordinary  difference  in  wholesale 
houses  between  six  months  credit  and  cash.    Whether 
this  is  sufficient  for  a  similar  discount  in  retail  business 
will  depend  a  good  deal  on  the  extent  of  the  credit,  and 
the  general  character  of  it  as  given  in  the  business.    If 
the  credits  are  verv  short,  and  only  to  a  class  of  custo- 
mers among  whom  failures  are  rare,  three  per  cent  may 
be  a  sufficient  reduction  for  cash.    With  longer  credit  and 
less  responsible  customers  it  might  be  profitable  to  give 
even  eight  per  cent  discount  for  cash.    The  rate  should 
be  governed  somewhat  with  reference  to  what  has  been 
added  to  the  profit  originally,  on  the  ground  of  giving 
credit.    For  details  of  what  this  should  be  the  reader  can 
consult  Chapter  V.  of  this  work. 

There  is  another  class  of  sales  common  in  retailing 
goods,  which  in  some '  localities  occupy  so  important  a 
part  as  to  require  notice  here.  They  are  such  as  are  sold 
nominally  for  cash,  but  really  on  a  credit  of  a  week  or 
a  fortnight,  sometimes  perhaps  of  a  month.  In  manufac- 
turing localities  where  the  operatives  are  paid  off  fort- 
ni^rhtly  or  monthly,  such  sales  are  very  general.  The 
op^'erative  runs  an  account  from  one  pay-day  to  the  next, 


190 


Tfeekly  and  Monthly  Accounts, 


when  it  is  paid  off,  and  the  next  day's  purchase  is  charg- 
ed on  a  new  account.  It  is  with  most  dealers  the  cus- 
tom to  regard  these  as  cash  sales,  but  they  are  very  dan- 
gerous ones  generally.  All  the  labor  of  keeping  accounts 
incidental  to  longer  credits  is  required,  and  the  risks  of  loss 
are  generally  greater.  There  is  always  a  tendency -to 
run  an  account  too  large  to  be  paid  at  the  next  pay-day, 
and  a  balance  has  to  bo  left  over  unpaid.  This  balance 
increases  from  month  to  month,  and  is  very  often  event- 
ually lost.  The  danger  too,  of  loss  of  work  by  the  cus- 
tomer, or  removal  from  the  place,  adds  to  the  risk. 

Sometimes  also  men  of  means,  who  do  not  wish  to  be 
troubled  at  every  trifling  purchase,  to  send  the  money, 
and  yet  wish  to  pay  cash,  want  an  account  kept  which 
they  will  settle  weekly  or  monthly,  as  the  dealer  may  de^ 
sire.  Setting  aside  the  trouble  of  keeping  the  account, 
if  reasonable  prudence  be  used  in  granting  the  favor 
only  to  those  who  always  pay  promptly  every  obligation, 
such  accounts  are  quite  as  good  as  if  the  cash  were 
paid  down.  In  a  locality  where  there  are  rival  stores, 
the  credit  may  have  its  advantage  in  inducing  the  cus- 
tomer to  confine  his  dealings  more  especially  with  the 
one  with  whom  he  has  a  running  account,  instead  of 
bestowing  a  portion  on  the  rival  stores.  In  general 
all  goods  sold  for  cash,  and  not  paid  for  on  delivery,  come 
under  the  head  we  are  now  considering,  and  all  such  sales 
require  a  degree  of  care.  Whatever  may  be  the  motive 
for  deferring  the  payment  on  what  are  thus  called  cash 
purchases,  they  can  not  exactly  be  considered  cash,  how- 
ever near  they  may  come  to  it  in  their  advantages.  And 
where  any  considerable  amount  of  goods  in  a  mixed  cash 
and  credit  business  is  sold  in  this  way,  in  the  summing  up 
of  the  day's  sales,  it  should  have  a  separate  item  in  the 
account. 


^  Safe  Tt^ay  to  ^nter  them. 


191 


The  great  tendency  that  short  credits  of  this  kind  have 
to  run  into  longer  ones,  makes  it  very  desirable  that  the 
retailer  should  have  such  a  discriminating  memorandum 
of  the  daily  transactions,  so  as  to  compare  notes  from 
time  to  time.  If  he  puts  these  sales  into  the  cash  sales 
of  the  day,  he  only  deceives  himself;  if  in  the  credit 
sales  he  may  still  deceive  himself,  as  in  the  average  they 
sometimes  make  the  credit  sales  result  better  than  they 
really  would  without  them. 

Dealers  who  do  a  cash  business  exclusively,  necessarily 
nave  more  or  less  of  such  sales.    It  is   a  custom  with 
«ome,  when   sales   of  this   kind   are  made,  not  to  count 
them  in  the  daily  sales  until  they  are  paid,  and  on  the 
day  of  payment  they  appear  as  a  cash  sale  of  the  day. 
This  is  a  very  safe  plan,  and  when  the  amount  so  sold  is 
not  great  in  proportion  to  the  rest  of  the  business,  has 
nothincr  objectionable.     When,  however,  the  amounts  so 
sold  giw  to  be  large,  almost  unawares   there   arises  a 
habit  of  depending  on  the  receipts  from  such  sales  at  cer- 
xain  periods,  to  pay  bills  which  may  be  falling  due.     The 
dealer  in  making  up  his  calculations  of  how  much  money 
he  will  have  on  a  certain  future  day,  turns  over  his  ac- 
count book,  and  reckons  on  this,  that  and  the  other  bill 
being  paid  by  that  time.     Whenever  this  occurs  these 
accounts  have  taken  the  character  of  short  credits,  and 
should  be  rated  and  considered  as  such  in  the  economy 

of  the  business. 

The  reader  is  in  this  connection  again  reminded  ot  the 
crreat  advantage  in  controlling  the  extent  of  credits,  in  a 
mixed  business  of  cash  and  credit,  by  the  plan  mentioned 
in  the  previous  chapter,  of  fixmg  a  limit  in  the  beginning 
of  a  season,  beyond  which  the  dealer  will  not  go  in  trust- 
ing out.  He  should  also  always  keep  a  running  memo- 
randum of  the  amount  credited  from  day  to  day,  and  the 


192 


^econsiderinsf  former  Conclusions » 


amount  paid  off,  so  thut  he  may  know  what  amount  in 
gross  he  has  trusted  out. 

This  gross  amount  may  with  propriety  be  sometimes 
varied  at  the  commencement  of  a  business  season,  after  a 
full  consideration  of  all  the  prospects  of  the  coming  sea- 
son's business.  Curtailed  or  shortened  when  matters 
look  inauspicious  for  prompt  settlements,  and  extended 
when  appearances  are  more  favorable. 

It  would  indeed  be  advantageous  for  a  retailer  to  take 
more  fully  into  consideration,  at  the  early  commencement 
of  every  season,  than  is  usually  done,  the  position  and 
expectations  of  his  customers,  and  generally  of  the  town 
or  neighborhood  in  which  he  lives,  in  regard  to  their 
ability  to  purchase  goods  as  heretofore,  noticing  any  cir- 
cumstances which  indicate  that  their  ability  to  purchase 
will  be  lessened  or  increased,  and  act  accordingly  in  pur- 
chasing goods  for  the  season's  supply,  and  possibly  in  in- 
ducing an  increase  or  decrease  of  the  gross  profit. 

The  circumstances  which  would  govern  the  conclusions 
are  such  as  bountiful  harvests,  great  activity  among  man- 
ufacturing establishments,  probable  increase  in  the  prices 
of  goods,  high  prices  for  the  products  of  the  customers, 
and  such  like  considerations,  which  will  naturally  have 
an  influence  in  increasing  the  demand  for  goods ;  while 
the  reverse  circumstances  would  as  naturally  reduce  the 
demand,  and  further  render  probable  that  even  the  re- 
duced demand  will  be  wanted  to  a  greater  extent  than 
heretofore  on  credit,  which  last  would  require  that  a 
larger  gross  profit  be  marked  on  the  goods  in  the  first  in- 
stance. 

Often,  too,  influences  favorable  or  unfavorable,  which 
have  extended  over  from  previous  years  ought  to  be  con- 
sidered. Whatever  course  should  be  adopted  after  this 
mature  consideration,  for  the  coming  season's  business, 


Refusing  Credit  Courteously, 


193 


whether  in  regard  to  purchasing  goods,  the  gross  profits 
to  be  made,  or  the  extent  of  credit  to  be  given,  should  be 
consistently  pursued,  and  not  deviated  from  on  light  con- 
siderations, particularly  during  the  excitement  of  a  busy 
season.  The  solicitations  for  credit  are  generally  most 
urgent  at  the  time  when  the  dealer  should  be  the  least 
favorably  disposed  to  grant  it.  When  it  is  safest  to  give 
it  the  customers  are  not  so  solicitous,  and  do  not  often 

need  it. 

A  dealer  will  never  succeed  who  permits  in  himself  the 
irresolution  of  deciding  to-day  and  changing  his  decision 
next  month,  to  come  back  to  the  first  one  a  month  later. 
Much   of  the  difficulty  which  many  dealers  encounter 
•  of  keeping  the  credit  sales  limited  to  a  proper  amount, 
and  only  to  the  safest  class  of  customers,  arises  from  a 
fear  of  giving  offence,  by  a  refusal  of  the  credit,  as  will 
be  sometimes  required,  to  persons  who,  to  a  fair  extent, 
the  community  regard  as  responsible.     When  A  know- 
ing that  the  dealer  has  given  credit  to  B,  finds  himself  re- 
fused, though  in   his   own  opinion  fully  as  responsible, 
he  is  naturally  disposed  to  feel  aggrieved.     But  a  dealer 
who  sells  on  credit  has  yet  much  of  his  business  qualifi- 
cation  tolearn,  if  he   cannot  refuse   an   application   for 
credit,  when  necessary,  in  such  way  as  not  to  give  offence. 
There  are  always  enough  reasonable  excuses  for  not 
giving  credit,  or  should  be  if  business  is  done  properly, 
which  are  true  and  honest  ones,  and  which  will  satisfy  an 
applicant.     One  need  only  be  instanced,  the  rule  limiting 
credit.     When  such  a  rule  is  known  to  exist,  a  refusal  to 
credit   will  never  be   cause   of  offence,   as   it   will  not 
infer  doubt  of  the  applicant's  responsibility.     In  case  of 
genuine  doubt  ofthe  applicant's  ability,  a  private  inves- 
tigation of  the  resources  on  which  he  depends  to  pay  the 
debt  when  due,  and  a  candid  yet  feeling  exposition  to  the 

17 


Offering  Credit  Thouffhtlessly— 

applicant,  of  the  uncertainty  of  his  dependence,  and  there- 
fore  the  danger  that  he  will  be  deceived  in  his  expecta- 
tions and  unable  to  pay,  will  rarely  offend  any  one. 
It  is  more  generally  the  open  and  public  refusal  of  credit, 
without  even  listening  to  the  inducement  which  the  ap- 
plicant has  to  present  that  offends  him ;  as  it  equally 
offends  good  taste  and  good  manners. 

A  dealer  who  really  feels,  as  he  should  feel,  a  regret 
that  the  circumstances  of  the  applicant,  or  his  character, 
are  such  as  to  preclude  him  from  giving  a  credit,  will  al' 
ways  express  himself  in  such  a  way  as  not  to  wound  the 
feelings  of  the  applicant.  It  can  be  done,  and  to  learn, 
how  should  be  the  study  of  every  dealer  who  is  so  sit- 
uated as  to  render  such  refusals  at  times  necessary. 

Another  way  in  which  the  credit  part  of  a  business  is 
comparatively  increased,  aud  often  unnecessarily,  is  from 
a  thoughtless  offering  of  credit  to  customers  who  would 
eventually  buy  for  cash. 

The  husband  looks  at  a  coat,  the  wife  at  a  shawl,  which 
they  will  want  later  in  the  fall,   as   the   weather  grows 
colder,    ''after    the    wheat    is  threshed  out  and  sold," 
or  if  it  is   a  mechanic,   after   some   certain   "job  is 
done."     The  dealer,  desirous  of  selling,  is  too  ready  to 
say,  "  it  will  make  no  difference,  take  the  things  now  and 
pay  me  then."     He  knows  them  perhaps  as  hard  work- 
ing, industrious  people,  with  but  little  means  or  qualifica- 
tion for  getting  ahead  in  the  world,  as  are  three-fourths 
of  his  customers.     The  husband  has  not  the  courage  to 
say  no;  if  he  makes  some  faint  reply  about  "not  runnmg 
in  debt,"  his  scruples  are  soon  overcome  by  the  retailer's 
assertion  that  if  he  delays  buying,  the  goods  will  surely 
be  sold.     Too  often,  when  pay-day  comes,  the  wheat  has 
not  been  sold  for  enough,  or  the  job  has  not  been  profit- 
able enough  to  pay  more  than  one-half  of  the  man's  debts. 


A.nd  the  Zoss  Therefrom, 


195 


Those  which  seem  most  pressing  are  paid,  (and  they  are 
rarely  "  store  bills,")  the  rest  must  "  wait  till  times  get 
better."  Is  it  strange  that  the  customers  of  such  retail- 
ers, and  the  retailer  himself  always  find  the  "  times  hard  ?'' 

Some  reader  may  query  whether  such  instances  as 
quoted  are  not  in  the  line  of  ordinary  risks  of  the  retail 
business,  and  whether  if  the  dealer  did  not  in  this  way 
forestall  the  transaction,  some  other  dealer  would,  and 
thus  the  first  one  lose  his  customer  ?  And  if  it  is  not 
fair  to  conclude  that  nine  out  of  ten  of  those  purchasing 
in  this  way  will  pay  sooner  or  later,  if  the  credit  is  given 
with  even  a  limited  degree  of  judgment? 

To  such  a  query  it  may  be  answered,  that  if  the  cus- 
tomer in  question  never  pays,  or  pays  only  after  a  pro- 
tracted credit  of  a  year  or  more,  the  dealer  will  lose  no- 
thing by  losing  the  sale.  As  in  case  the  purchase  is 
made  in  a  similar  way  at  a  rival  store,  the  fair  chances 
are  that  he  will  not  entirely  lose  his  customer. 
During  all  that  period  between  the  full  maturity  of  a 
debt  so  created,  and  the  time  when  it  is  actually  paid, 
whatever  money  the  customer  has  to  spend,  is  more  like- 
ly to  be  spent  in  a  store  where  he  is  not  in  debt.  It  being 
a  well  experienced  truth,  that  the  debtor  who  cannot 
pay,  ordinarily  prefers  spending  his  money  at  some  place 
where  he  will  not  meet  his  creditor.  A  preference  arising 
probably  from  the  fact,  that  a  creditor  always  thinks  that 
the  best  use  a  debtor  can  make  with  his  money,  is  to  jiay 
his  debts  actually  due ;  while  debtors  often  think  that 
there  are  necessities  more  pressing  in  the  demand  for  their 
money,  than  the  j^ayment  of  a  store  debt  for  goods  re- 
luctantly taken  on  credit.  And  owing  to  this  difference  of 
opinion,  the  debtor  does  not  care  to  let  the  creditor  know 
that  he  has  money  to  spend,  to  make  such  purchases. 

The  querist  might  find  another  argument  against  the 


i 


196 


The  Creditor's  ^est  Guaranty, 


offered  credit,  in  the  method  instanced,  in  the  reflection 
that  the  momentary  anxiety  to  make  the  sale,  too  often 
prevents  that  careful  scrutiny  into  the  customer's  respon- 
sibility, which  would  be  made  if  the  credit  was  solicited, 
and  therefore  it  is  not  probable  that  nine-tenths  of  such 
debts  will  be  promptly  paid,  and  if  less  than  that  num- 
ber pay,  it  will  be  as  well  for  the  dealer  to  forego  the  whole 
class  of  such  sales. 

It  is  not  meant  that  credit  ought  not  to  be  offered  at 
times  to  customers,  only  that  it  should  not  be  done  with- 
out previous  reflection.  A  dealer  who  credits  out  hiH 
goods,  will  often  find  the  safest  customers  most  reluctant 
to  ask  credit,  and  an  occasional  hour  might  be  well  spent 
in  considering  the  propriety  of  offering  credit  to  certain 
persons  whom  the  dealer  would  like  to  secure  as  custo- 
mers. Still  the  experience  of  most  retailers  will  confirm, 
the  opinion  that  three-fourths  of  their  losses  by  bad  debts 
came  through  thoughtlessly  offering  credit  to  those  who 
did  not  solicit  it. 

A  debt  created  in  this  way  is  never  held  so  sacred  by 
the  debtor  as  one  where  he  has  solicited  the  credit.  He 
is  always  ready  to  excuse  any  inability  or  unwillingness 
to  pay,  by  making  himself  believe  that  he  was  cheated  in 
the  transaction,  or  at  least  that  he  was  unduly  influenced 
against  his  better  judgment  to  contract  the  debt,  and  that 
the  creditor  does  not  deserve  to  be  paid  in  any  haste. 
The  money  is  often  withheld  for  a  time  for  such  reasons, 
even  when  the  debtor  is  well  able  to  pay. 

Wherever  the  laws  shield  a  debtor,  as  they  do  so  gen- 
erally throughout  the  United  States,  the  best  guaranty 
for  payment,  that  a  creditor  can  have,  is  the  moral  and 
equitable  obligation  to  pay,  in  the  heart  of  the  debtor; 
and  this  is  always  stronger  when  the  debtor  feels  that  he 
was  not  unduly  persuaded  to  go  into  debt. 


CHAPTER  Xni. 


ON  EEPLENISHING   STOCK. 


THERE  are  great  numbers  and  varieties  of  goods  in  a 
retail  trade,  that  are  so  staple  in  their  character,  and  so 
regular  and  general  in  their  sale,  that  all  that  is  neces- 
sary when  they  are  sold  out,  is  to  buy  more,  a  matter  of 
very  little  difficulty,  supposing  that  they  could  at  all  times 
be  as  favorably  obtained. 

But  for  the  larger  part  of  any  stock  of  goods,  there 
will  be,  at  different  periods  of  the  year,  greater  or  lesser 
demands.  For  some  articles,  indeed,  the  demand  is  only 
for  a  short  period  of  tlie  year,  perhaps  not  over  a  month, 
and  is  so  marked  that  almost  any  one  may  be  considered 
wise  enough  to  heed  it  in  making  purchases ;  and  would 
know  enough  not  to  replenish  the  stock  of  scythes  when 
the  mowing  season  was  near  over,  or  of  skates  when  the 
ice  was  breaking  up  in  a  March  thaw.  Many  other  ar- 
ticles have  such  periodical  cessations  in  the  demand,  and 
it  may  be  wise  for  a  retailer  to  conclude  that  all  the  ar- 
ticles he  sells  have  more  or  less  of  this  variableness.  Be- 
sides which,  the  most  of  them  have  periods  of  increased  or 
deficient  supply,  and  consequently  a  less  or  greater  price, 
depending  upon  the  supply.  If  to  these  two  we  add  the 
influence  of  fashion  on  dress,  furniture,  equipage,  build- 
ings, even  on  food  and  its  method  of  preparation  and  set- 
ting forth,  whereby  sudden  and  capricious  demands  are 
created  for  certain  articles,  which  demands  are  liable  to 
cease  as  suddenly  and  capriciously;  and  also  the  influ- 
ence  of    the   invention    of    new   contrivances  or   conve- 


198 


Periods  in  which  to  fteplenish. 


Zoss  in  ^edtichiff  Slock  Too  Low, 


199 


^ 


niences  which  are  brought  into  use,  and  supplant  the  old 
articles  kept  for  sale,  it  will  readily  be  seen  that  a  re- 
tailer, who  would  be  successful,  has  several  thincrs  to 
think  about,  before  he  goes  forth  to  replenish  his  stock, 
and  that  a  simple  re-purchase  of  more  of  the  same  goods 
he  has  sold  out,  is  not  all  that  is  required. 

A  retailer  should  carefully  notice  these  periods  or  seasons 
for  the  sale  of  each  article  he  keeps,  and  the  correspond- 
ing periods  when  they  are  not  in  demand,  as  also  the  pe- 
riods of  supply  when  he  can  buy  them  to  the  best  advan- 
tage, and  be  so  familiar  with  the  subject  as  to  know  at 
once  whether  it  is  proper  to  replenish  or  not.  There  is 
sometimes  a  tendency  to  make  unseasonable  purchases, 
among  very  timid  (and  they  are  generally  regarded  as 
very  prudent)  buyers.  While  an  article  is  in  demand 
they  buy  so  sparingly  that  they  are  half  the  time  out  of 
it.  At  a  later  period,  when  the  season  is  near  its  close, 
and  the  article  on  that  account  is  offered  at  less  price, 
they  for  the  first  time  purchase  a  full  assortment,  to  find, 
when  it  is  in  store,  that  the  season  for  the  sale  has  passed 
by.  On  the  other  hand  care  must  be  taken  not  to  let  the 
variety  run  down  unduly  low.  Some  dealers,  because  the 
busy  season  in  some  kinds  of  business — especially  in  dry 
goods — is  divided  into  two  periods,  the  spring  and  fall, 
suffer  their  stocks  to  run  down  so  low,  even  on  staple 
goods*  as  to  be  unable  to  supply  the  demand  of  the  in- 
termediate period.  A  little  relaxation  from  a  strict  rule 
in  reducing  stock  may  be-  permitted  even  where  it  may 
be  thought  not  directly  profitable,  for  the  sake  of  retain- 
ing customers. 

The  most  thrifty  dealers  now  find  their  advantage  in 
keeping  up  a  fair  assortment  of  the  more  staple  kinds  of 
goods  the  year  round.  An  assortment,  however,  not  so 
remarkable  for  its  abundance  as  for  its  selection.     This  is 


a  great  point  to  be  observed.  It  often  happens  that  a  re- 
tailer has  not  found  his  sales  of  some  articles  meet  his  ex- 
pectations, and  the  goods  that  should  have  been  sold  early 
in  the  season  remain  on  hand  towards  its  close.  He  feels 
that  his  stock  is  too  large  for  the  coming  dull  period, 
and  as  he  can  not  reduce  it  sufficiently  by  selling  off  the 
goods  which  belong  to  the  season  more  especially,  he  suf- 
fers the  more  staple  goods  to  run  down  in  assortment  so 
a?  to  get  the  stock  down  to  his  calculations,  often  losing 
thereby  a  great  deal  of  trade.  Such  a  course  is  very  un- 
profitable, and  even  though  a  retailer's  stock  may  be  too 
large  in  unseasonable  goods,  he  should  be  careful  in  re- 
ducing it  in  such  staple  articles  as  are  of  frequent  de- 
maud.  It  will  not  do  to  cease  entirely  in  purchasing,  as 
is  often  done,  but  to  buy  with  discrimination;  mean- 
while reducing  stock  in  the  articles  that  are  unseasonable, 
if  the  dealer  can  not  afford  to  hold  them  until  the  season 
for  their  sale  again  comes  round.  He  may  do  this  by 
offering  them  at  cost,  as  being  out  of  season.  A  low 
price  will  sometimes  tempt  customers  to  buy  an  article 
months  in  advance  of  their  need  of  it.  There  is  no  way 
by  which  a  dealer  can  keep  himself  informed  about  his 
stock,  and  the  necessity  for  replenishing  it  in  any  partic- 
ular article,  or  the  duty  of  refraining  therefrom,  so  well 
as  to  be  much  among  his  goods  in  selling  them,  and  as 
he  notices  them  from  day  to  day  in  his  store  room,  to 
consider  whether  the  season  for  their  sale  is  not  passing 
away,  and  therefore  the  propriety  of  urging  the  sale  of 
what  he  yet  has  of  them,  and  the  risk  of  buying  more 
when  these  are  all  sold. 

In  every  well  regulated  retail  store  a  memorandum 
slate  or  list  is  kept  conveniently  at  hand,  to  note  down 
such  articles  as  are  out,  or  nearly  so,  or  such  as  may  have 
been  enquired  for,  and  never  kept,  if  in  the  line  of  the  busi- 


200 


J^orethought  and  ^Decision  Required, 


ness.  This  memorandum  might  be  advantageously  made 
use  of  to  keep  a  note  also  of  articles  that  seem  to  be  in 
unusual  demand, particularly  where  they  are  such  goods  as 
are  likely  to  be  in  scant  supply  on  account  of  this  large 
demand,  and  which  may  be  advanced  in  price,  or  perhaps 
unattainable  if  left  later. 

It  by  no  means  follows  that  the  dealer  is  to  buy  all  the 
articles  that  may  thus  find  their  way  on  this  memoran- 
dum. It  is  for  him  to  consider  and  discriminate  what 
may  be  profitable  to  buy,  and  what  not. 

The  dealer's  success  in  business  will  depend  in  a  great 
measure  on  his  ability  to  make  this  discrimination.  By 
a  view  of  all  the  peculiarities  of  each  separate  article, 
and  the  demand  there  is  likely  to  be  for  it,  he  must  shape 
his  course,  and  according  to  his  success  in  thus  in  a  mea- 
sure forestalling  the  market,  will  be  his  success  in  busi- 
ness. One  dealer  seems  to  weigh  these  matters  so  care- 
fully and  so  shrewdly,  that  he  always  has  the  articles 
w^anted  in  the  season,  at  a  reasonable  price,  and  yet  never 
seems  to  have  an  undue  quantity  when  the  season  has 
passed  by.  While  another  dealer  ever  lacks  goods  to 
meet  the  popular  demand,  though  he  has  his  store  room 
filled  with  unsaleable  kinds  of  goods. 

The  two  requisites  for  a  dealer  to  guide  him  aright  in 
such  matters,  are  forethought  and  decision.  A  dealer 
oucrht  to  consider  whether  the  article  that  suited  his  cus- 
toniers  in  the  past  will  continue  to  do  so  in  the  future, 
and  if  he  remembers  that  there  were  complaints  about  it, 
to  further  consider  what  there  mav  be  which  will  better 
supply  its  place.  And  having  found  it,  either  by  his  own 
observation,  or  by  noticing  that  one  or  two  of  his  more 
intelligent  customers  are  inquiring  about  it,  and  have 
their  minds  turned  to  it,  then  decision  will  induce  him 
to  buy  at  once,  before  the  whole  world  have  found  out 


^xpetnme7ital  ^irchases. 


201 


that  the  new  article  is  superior  to  the  old,  and  before  any 
great  demand  has  enhanced  the  price,  or  made  the  article 
unattainable.  The  dealer  who  has  neither  of  these  qual- 
ities is  guided  only  by  his  experience  of  the  past,  and 
buys  the  article  he  has  found  saleable  before.  Conse- 
quently when  the  demand  for  the  new  article  is  first 
slightly  felt,  he  is  in  no  situation  to  purchase,  as  he  has 
a  stock  of  the  old,  and  even  if  he  succeeds  in  selling  that 
eventually,  his  indecision  induces  him  to  postpone  the 
purchase  of  the  new.  He  is  not  sure  yet  that  it  will 
sell,  thinks  it  may  possibly  be  only  a  capricious  demand, 
and  if  he  buys  freely  of  it  at  all,  it  is  only  at  the  tail  end 
of  the  season,  when  the  price  has  fallen  again. 

There  is  of  course  a  risk  in  dealing  in  goods  of  such 
changeable  price  and  demand,  but  they  are,  as  a  class, 
goods  that  pay  large  profits  to  those  who  arc  prompt  to  take 
the  risk.  To  the  retailer  who  comes  in  actual  contact 
with  the  customer,  the  risk  in  buying  such  articles  need 
not  be  so  great  as  would  be  supposed.  By  purchasing  a 
small  quantity  of  those  which  seem  from  their  qual- 
ities to  give  promise  of  being  saleable,  when  they  first 
come  out,  he  has  the  chance  of  experimentally  testing 
the  desirableness  of  the  goods  with  a  few  customers.  If 
the  right  class  of  these  like  the  goods  and  buy  them,  even 
though  in  limited  quantity,  the  dealer  may  pretty  safely 
venture  to  purchase  more  freely. 

There  is,  however,  a  chance  of  loss,  which  must  be 
guarded  against,  where  the  goods,  on  account  of  being 
new,  are  held  relatively  much  above  their  value.  An  in- 
creased demand  may  induce  other  parties  to  go  into  the 
manufacture  of  them,  which  tends  quickly  to  reduce  the 
price.  The  retailer  must  judge  of  this  risk,  after  taking 
into  consideration  the  readiness  with  which  the  produc- 
tion of  the  article  can  be  increased,  and  the  probabilities 


202 


^isk  in  buying  ^^verything  disked  7^o?\ 


Ordering  Goods  hy  Zetter. 


203 


that  the  price,  though  relatively  high,  may  not  be  so 
high  as  to  induce  many  to  go  into  the  manufacture,  and 
limit  or  increase  his  purchases  accordingly.  Ofttimes  re- 
tailers forbear  purchasing  articles  of  the  variable  class  of 
goods  which  depend  upon  fashion  or  style  for  their  suc- 
cessful sale,  by  governing  their  purchases  too  much  by 
their  own  prejudice  or  taste,  and  not  enough  by  the 
taste  of  the  community  for  whom  they  buy.  AVhile  a 
dealer  should  be  largely  governed  by  his  own  personal 
appreciation  of  any  novelty  in  the  first  instance,  it  is 
not  well  always  to  decline  buying  any  new  fashion  merely 
because  it  may  not  please  his  own  taste,  when  he  sees 
others  are  pleased  with  it.  "  It  does  not  suit  my  fancy," 
has  often  been  the  reason  why  a  retailer  forbore  to  pur- 
chase a  certain  article ;  though  he  knew  his  customers 
were  asking  for  it,  and  buying  it  in  other  stores. 

Again,  "I  like  it,  and  I  will  make  it  sell,"  is  just  as 
foolish,  when  it  is  the  inducement  to  buy  largely  of  any 
article,  which  his  observation  should  have  taught  him 
would  not  strike  the  fancv  of  his  customers.  A  mer- 
chant  has  no  business  to  have  a  fancy  for  any  thing  but 
what  his  customers  like,  and  which  they  will  buy. 

It  is  sometimes  a  fault  with  retailers,  in  country  local- 
ities, where  there  are  few  or  no  other  stores,  that  they  try 
to  keep  a  little  of  every  thing  asked  for.  Indeed,  some 
pride  themselves  on  having  every  thing  in  their  line, 
"  from  a  needle  to  an  anchor."  This  may  not  be  amiss, 
and  quite  a  convenience  for  the  neighborhood,  Avhen  the 
dealer  can  afford  it,  but  it  is  not  profitable.  The  author 
knew  a  country  retailer,  years  ago,  who  had  an  applica- 
tion from  an  old-fashioned  customer  for  green  cam- 
let for  a  cloak.  Notwithstanding  that  the  article  had 
been  then  several  years  out  of  fashion,  and  only  occa- 
sionly  seen  in  some  old  weather-beaten  and  faded  mantle, 


the  dealer  purchased  two  pieces  of  different  qualities,  to 
have  an  assortment.  He  sold  of  one  piece  some  five  or 
six  yards  to  the  customer,  and  the  balance  of  his  pur- 
chase remained  unasked  for  on  his  shelves,  till  sold  at 
auction  on  closing  out  his  business,  many  years  afterward, 
at  about  one-half  the  original  cost.  Generally  one  such 
lesson  will  suffice  to  teach  a  dealer  that  he  can  not  with 
profit  buy  everything  that  may  be  asked  for. 

The  customer  will  ordinarily  be  just  as  well  accommo- 
dated by  the  purchase  of  the  exact  amount  or  quantity 
desired,  and  even  though  by  buying  in  this  way,  the 
dealer  may  make  no  profit  on  the  transaction,  it  is  still 
preferable.  Sometimes  this  profit  is  the  temptation  in- 
ducing  the  dealer  to  purchase  more  than  he  intended,  be- 
cause he  gets  it  cheaper  by  taking  the  quantity,  but  such 
gain  will  turn  to  a  loss  in  the  end.  When  next  stock- 
taking time  comes  round,  and  the  quantity  on  hand  is  in- 
ventoried, the  dealer  would  often  give  twice  his  profit  on 
the  part  sold  to  get  rid  of  the  balance. 

When  the  retailer  does  business  at  a  distance  from  the 
locality  where  he  buys  his  goods,  it  is  often  more  advan- 
geous  to  him  to  order  such  goods  as  he  needs  to  replen- 
ish his  stock  by  mail,  than  it  is  to  incur  the  expense  of  a 
personal  visit,  taking  also  into  consideration  the  loss  his 
absence  from  the  business  for  the  time  might  cause. 

This  method  of  obtaining  goods  is  not  so  popular  in 
this  country  as  it  might  be,  mainly,  it  is  believed,  from 
want  of  care  in  writing  out  the  details  of  the  orders.  It 
used  to  be  the  fashion,  years  ago,  for  the  wholesale  dealers 
to  print  conspicuously  at  the  heads  of  their  invoices, 
"  all  orders  particularly  attended  to,"  or  some  equivalent 
phrase,  which  is  much  out  of  fashion  now.  And  as  orders 
are  generally  written,  the  most  of  the  dealers  would  pre- 
fer never  to  receive  any  except  for  goods  of  standard  make. 


204 


Jinporfance  of  J^ull  details  * 


Ordering  from  Samples, 


205 


The  order  generally  is  either  so  closely  restricted,  or 
for  such  desirable  styles  of  goods  as  are  out  of  market;, 
that  the  wholesale  dealer  can  not  fill  it ;  or  it  is  so  vague 
that  he  does  not  know  half  the  time  what  to  send,  and 
on  that  account  sends  such  goods  as  he  has  in  stock, 
which  are  often  only  the  refuse  of  the  season's  sales — and 
either  way  the  retailer  is  disappointed  and  disinclined  to 
try  ordering  again. 

The  order  in  the  first  case  would  probably  read,  "  send 
12  ps.  Sprague's  prints,  same  as  pattern  enclosed, 
at  12J  cts,  assorted  colors,  but  no  purple  ground." 
And  thoucrh  the  wholesale  dealer  has  the  twin  brother  to 
the  "  pattern,"  yet  he  has  not  the  same,  or  if  he  has,  the 
price   is  raised  to  thirteen  cents,  and  he  has  learned  by 
experience  that  he  has  to  pay  express  charges  back  on 
goods  when  they  are  not  in  accordance  with  the  order^ 
and  so  writes  that  he  cannot  fill  that  part  of  the  order. 
In  the  second  case  the  order  reads  vaguely : 
"Send  12  ps.  Sprague's  dark  prints,   assorted   colors, 
new  styles  and  pretty." 
And  ha  picks  out  what  he  thinks  pretty,  though  the  re- 
tailer is  disappointed,  because  they  are  not  such  "  neat 
little  patterns  "  as  he  requires  for  his  customers,  but "  great 
*  splashy '  figures,  with  all  the  colors  in  the  rainbow,  be- 
sides being  a  cent  a  yard  more  than  he  expected  to  pay 
for  them  ;  and  that  satisfies  him  so  far  as  ordering  goods 
by  letter  is  concerned  for  the  future." 

Now  an  order  may  be  written,  giving  a  large  liberty 

of  selection,  and  yet  limiting  the  selection  within  certain 

bounds,  when  a  retailer  will  take  the   trouble   to   do   it. 

Suppose  the  same  order  written  out  and  reading  as  follows : 

"  Send  12  ps.  Sprague's  dark  prints,  at  12^  cts.  a  yd., 

of  the  latest  designs,  assorted   in  about  three  or 

four  diflferent  patterns,  gay  and  bright  styles,  about 


as  sample  marked  1  enclosed,  and  about  that  size 
ficrure ;  none   smaller  figure   than  sample   2,  nor 
larger  than  sample  3 ;  and  if  they  are  higher  than 
12i-  cents  send  half  of  them  of  Sprague's,  and  half 
the  best  quality  you  can  at  12J  cents." 
This  would  take  more  writing,  but  it  is  worth  the  time 
it  takes.     When  the  wholesale  dealer  receives  an  order  of 
this  character,  he  has  enough  latitude  to   generally  be 
able  to  fill  the  order,  and  yet  send  exactly  what  the  re- 
tailer writes  for. 

Of  course  it  does  often  occur  that  a  retailer  wants  the 
specific  article  he  writes  for,  for  a  customer,  and  if  that 
can  not  be  had  wishes  no  other,  the  customer's  want  be- 
ing  as  well  supplied-if  that  special  article  can  not  be 
had-from  other  goods  in  the  retailer's  stock,  as  it  would 
likely  be  by  any  difi'erent  article  sent  to  fill  the  order. 
In  such  a  case  it  should  be  always  specially  mentioned, 
that  if  the  precise  article  ordered  can  not  be  sent,  no  sub- 
stitute is  wanted. 

It  is  sometimes  very  advantageous  to  the  retailer  to 
write  for  and  obtain  samples  of  certain  styles  of  goods, 
out  of  which  he  will  select  what  he  likes  to  give  an  order 
for      One  drawback  to  this  plan  is,  that  in  the  busy  sea- 
Bon  when  everything  is  active  in  the  wholesale  market, 
in  the  few  days  time  which  would  ordinarily  intervene 
before  the  order  got  back  to  the  wholesale  dealer,  the 
goods  would  be  all  sold  off.    The  telegraph  can  be  used 
sometimes  to  shorten  this  intervening  time,  and  when  it  is 
intended  to  order  by  it,  it  should  be  mentioned  m  the  re- 
quest for  samples,  and  directions  given  to   number  the 
samples,  and  keep  such  a  record  of  them  as  that  they 
would  know  what  goods  are  wanted  when  the  number  is 
sent.     When  the  order  is  by  subsequent  letter,  it  is  always 
well  to  give  a  little  option,  if  possible,  in  fiUing  it,  as 


206 


Returning  Goods  Ordered, 


some  of  the  goods  may  have  been  sold  in  the  interim. 

Sometimes  an  arrangement  can  be  made  with  a  whole- 
sale dealer,  that  such  goods  as  he  may  send  on  an  order 
of  liberal  scope,  which  do  not  please  the  retailer,  may  be 
returned  at  the  latter's  expense.  Or  in  some  cases,  when 
the  wholesale  dealer  is  unable  to  send  anything  near  what 
is  ordered,  he  will  send  a  variety  of  goods  the  nearest 
like  he  has  in  stock,  giving  the  retailer  the  privilege  of 
selecting  out  what  he  pleases,  and  sending  back  the  bal- 
ance  at  his  expense. 

The  only  objection  to  this  is,  that  sometimes  the  whole- 
sale dealer,  in  his  desire  to  get  rid  of  his  stock  in  filling 
the  order,  does  not  take  the  trouble  he  otherwise  would 
to  look  for  and  get  just  such  goods  as  are  ordered. 


CHAPTEK   XIY. 

SETTLING  FOR  PURCHASES. 

AS  very  much  of  the  retailer's  credit  and  standing 
among  wholesale  dealers  will  depend  upon  his  manner  of 
settling  for  his  purchases,  it  may  not  be  amiss  to  devote 
a  few  pages  to  that  subject. 

Although  it  would  seem  more  business  like  for  the 
wholesale  dealer,  in  giving  credit,  and  especially  as  he  re- 
news it  from  time  to  time,  to  know  that  the  retailer  is 
conducting  his  business  on  correct  principles,  and  that  he 
is  fully  acquainted  with  the  goods  he  deals  in— buy- 
ing only  those  which  he  has  a  good  prospect  of  selling, 
and  selling,  too,  at  a  fair  profit— that  he  is,  in  short,  a 
careful,  prudent  and  intelligent  business  man,  with  sufii- 
cient  means  to  himself  bear  any  ordinary  loss  in  his  busi- 
ness, than  to  depend  simply  on  the  one  criterion  of  prompt- 
ness in  paying ;  still  we  must  take  things  as  they  are, 
and  not  as  we  think  they  should  be,  and  it  may  be  that 
experience  has  taught  the  most  of  the  wholesale  dealers 
that  irregularity  in  payments,  by  a  retailer,  is  a  pretty 
sure  indication  of  some  radical  defect  in  his  busi- 
ness qualification.  The  person  who  attends  to  giving 
credit  in  many  of  the  large  wholesale  houses — ^the  finan- 
cial member  of  the  firm,  as  he  is  called — or  his  especial 
deputy  or  clerk,  has  often  very  little  opportunity  to  learn 
by  personal  intercourse  with  the  retailer,  anything  about 
his  general  business  qualifications,  except  in  respect  to 
his  settlements  for  purchases.  This  being  the  only  part 
of  the  business  intercQurse  which  comes  directly  undr-r 


a 


208 


Giving  Azotes  in  Setltement, 


]iis  supervision.  Consequently  when  a  retailer  once  ob- 
tains a  credit  in  such  a  wholesale  house,  the  confidence  of 
this  financial  member  continually  increases  in  him  if  he 
uniformly  makes  prompt  settlements,  according  to  the 
terms.  Many  a  retailer  is  able  to  do  this  for  years, 
thouorli  doino:  business  at  a  loss  all  the  time,  and  on  the 
other  hand,  sometimes  perfectly  solvent  retailers  are 
found,  who  either  from  carelessness  or  disregard  of  its 
importance,  half  the  time  fail  to  pay  their  bills  at  ma- 
turity— allowing  their  notes  to  go  to  protest  with  very 
little  concern. 

The  custom  of  requiring  the  retailer's  promissory  note 
in  settlement  of  a  bill  of  goods  bought  on  credit,  is 
found  so  advantageous  to  the  wholesale  dealer,  that  it  is 
now  almost  uniformly  required  ;  and  a  beginner  in  the  re- 
tail business  will  find  it  almost  impossible  to  obtain  a  first 
class  credit  without  conforming  to  the  custom.  There 
are  yet  to  be  found  a  few  old  and  substantial  retailers, 
who  were  in  business  years  ago,  before  this  usage  was  so 
general,  and  whose  credit  is  well  established,  who  are 
known  to  be  so  responsible  that  they  can  obtain  goods  on 
credit,  and  are  courted  for  their  custom,  even  though  they 
refuse  to  give  their  notes. 

But  it  would  be  regarded  as  a  sign  of  weakness  in  a 
man  just  commencing,  to  refuse  to  give  such  notes.  If  the 
credit  is  given  after  such  refusal  at  all,  it  will  be  only  be- 
cause the  sale  is  in  some  way  specially  desirable  to  the 
wholesale  dealer,  lie  will  place  but  little  reliance  in 
the  debtor's  punctuality,  and  will  consider  that  the  under- 
taking of  the  debtor  is  to  pay  at  maturity  if  convenient ; 
and  if  he  should  not,  he  expects  to  wait  a  reasonable 
time  longer,  till  the  debtor  finds  it  convenient ;  or  relies 
on  his  ability  to  enforce  payment  at  maturity. 

There  is  always  one  exception  to  this :  whenever  the  re- 


Con forming  to  the  Customs  of  the  Trade, 


209 


tailer  is  able  to  say  and  fulfill  his  promise,  "  I  don't  give 
notes  for  my  purchases,  but  will  at  any  time  give  you  the 
cash  with  the  current  rate  of  interest  deducted,"  he 
may  stand  on  a  par  with  the  dealer  who  gives  notes.  Un- 
fortunately there  are  but  few  who  commence  the  retail  busi- 
ness with  sufficient  capital  to  warrant  them  in  making 

such  ofiers. 

A  retailer  will  find  it  to  his  advantage  to  conform  will- 
ingly to  such  well  settled  usages  of  the  trade,  and  give 
notes,  and  govern  his  intercourse  in  accordance  with  the 
rules  of  the  house  in  which  he  purchases.     The  know- 
ledge that  notes  are  to  be  given  for  a  contemplated  pur- 
chase,  and   that  they  must  be  paid   at  maturity,   will 
tend  to  make  him  more  cautious  as  to  the  amount  of  goods 
he  buys,  and  that  he  buys  only  such  as  are  sure  to  sell 
promptly.     Such  customs,  therefore,  tend  in  a  measure  to 
his  own  advantage,  as  he  is  not  so  likely  to  buy  what  he 
does  not  really  want,  or  in  excess  of  his  wants,  as  when 
he  has  not  the  necessity  for  caution  so  forcibly  impressed 
on  his  mind.     When  he  buys  on  open  account  there  is  an 
easier  feeling,  it  does  not  seem  so  important  to  be  careful 
in  the   selection   of  his  goods;   if  they  are   only   cheap 
enough  they  will  sell  sooner  or  later,  and  if  not  all  sold 
when  the  bill  falls  due  he  will  take  a  little  extra  time  on  it. 
Through  this  method  of  buying,  dilatory  habits  in  pay- 
ing are  engendered,  till  soon  the  retailer  falls  into  the  way 
of  buying   without   any   special  regard  to  the  maturity 
of  his  purchases,  or  to  his  ability  to  pay  for  them.     He 
pays  when  he  is  dunned— if  he  has  the  money— becoming 
yearly  less  and   less   sensitive   about   the    dunning.     His 
business  falls  into  confusion,  and  even  though  he  may  be 
abundantly  solvent,  his  credit  becomes  impaired.     Those 
who  have  hitherto  sold  to  him,  do  not  care  to  continue 
selling,  except  they  get  increased  profits,  or  can  put  off 


210      Changes  in  the  knowii  **  Terms'^  of  Sale. 

on  him  old  and  undesirable  styles  of  goods,  and  he  has 
not  a  record,  which,  when  he  gives  a  reference,  will  get 
him  into  credit  in  new  houses.  Indeed,  without  a  radical 
change  in  his  system  of  business,  he  would  buy  no  cheaper 
or  more  favorably  in  new  houses,  so  soon  as  his  dilatory 
habits  are  known,  than  he  does  from  his  old  creditors. 

Such  experiences  are  sometimes  encountered  by  men 
who  are  abundantly  solvent,  who  have  employed  too 
much  of  their  capital  in  some  outside  enterprise  or  invest- 
ment. 

"Whatever  changes  from  the  regular  known  terms  of 
credit  in  the  house  in  which  purchases  are  made,  may  be 
desired  by  the  purchaser,  should  be  applied  for  before  the 
purchase  is  made.  When  some  unforeseen  or  unexpected 
circumstance  has  occurred  after  the  goods  are  purchased, 
making  a  change  in  the  terms  desirable,  it  may,  with- 
out objection,  be  still  applied  for,  so  long  as  the  goods 
are  yet  under  the  control  of  the  seller,  and  he  is  free  to 
grant  the  buyer's  request  or  retain  the  goods.  When 
they  are  once  under  the  control  of  the  buyer,  such  changes 
must  be  asked  for  as  favors ;  before  they  are  business  ar- 
rangements, wherein  buyer  and  seller  stand  on  an  equal- 
ity. If  the  seller  does  not  like  the  proposed  change,  he 
can  refuse  it,  and  the  purchase  can  be  annulled.  After 
the  goods  have  come  into  the  buyer's  hands,  it  is  better 
for  him  to  come  squarely  up  to  the  agreement,  and  give 
his  notes  according  to  the  terms,  even  though  he  may 
have  doubts  about  his  ability  to  meet  them  as  given.  At 
the  worst,  it  is  then  only  a  future  probabihty,  and  persistent 
effort  may  overcome  the  difficulty ;  and  even  if  it  does  not, 
and  the  retailer  has  to  fall  back  on  the  holder  of  the  note 
at  maturity  for  aid  to  carry  him  through,  it  is  less  objec- 
tionable than  the  other  course  would  be. 

Such  a  reasonable  request  as  to  divide  the  purchase 


Meeting  the  Obligations, 


211 


money  into  payments  of  the  same  average  time  as  the 
terms,  might  be  applied  for  at  any  time.  As  where  a 
bill  of  $1,000  hafi  been  bought  on  six  months  credit,  and 
it  is  found  that  so  many  other  smaller  purchases  have 
been  settled  for  by  six  months  notes,  that  it  is  feared 
the  payments  at  that  period  will  be  too  large,  a  request  to 
give  two  notes  of  $500  each,  at  five  and  seven,  or  four 
and  eight  months,  will  not  be  out  of  plaxje,  and  will  oft^n 
be  granted,  to  the  great  convenience  of  the  retailer.  A  re-  , 
quest  for  two  or  three  months  extra  time  might  well  be 
thought  an  unreasonable  one  to  make  after  the  goods  are 

delivered. 

Too  often  all  such  contemplated  changes  are  left  by 
the  buyer  until  he  gets  the  goods  in  his  possession,  when 
even  to  apply  for  an  increase  of  time  is  regarded  as  a 
greater  sign  of  weakness  than  it  would  be  to  ask  aid  in 
taking  up  the  note  at  maturity.  A  perfectly  solvent  and 
responsible  man  may  be  so  far  out  in  his  calculations  as 
to  be  short  of  money  to  meet  his  note  at  its  matiuity,  and 
prefer,  as  the  least  of  two  evils,  to  ask  his  creditor  to  ex- 
tend  it,  rather  than  to  borrow  from  his  friends,  or  ask  them 
to  endorse  a  note  to  raise  the  necessary  funds. 

Having  given  out  the  notes  in  accordance  with  the 
terms,  or  where  the  purchase  is  on  open  account,  it  be- 
comes now  the  retaUer's  duty  to  give  his  attenUon  to  mak- 
ing preparation  for  payment  at  maturity.  If  the  instruc- 
tion set  forth  in  the  previous  chapters  of  this  book,  m 
relation  to  founding  the  maturity  of  the  credits  and  the 
amounts  thereof,  on  the  receipts  from  the  sales  for  each 
month  in  the  year,  has  been  strictly  followed,  and  in  the 
calculations  enough  margin  has  been  allowed  for  contin- 
gencies, there  will  be  sufficient  money  received  from  the 
sales  to  make  the  payments  as  they  mature. 


II 


\i 


212 


^orrowmg  to  meet  Payments, 


Should  it  sometimes  unfortunately  happen  by  a  miscal- 
culation, that  a  note  is  maturing  at  a  period  when  the  ex- 
pectations from  sales  are  not  realized  or  likely  to  be,  and 
no  arrangement  can  be  made  to  raise  money  temporarily 
on  a  loan,  or  without  unreasonable  sacrifice,  and  the 
debtor  is  satisfied  that  beyond  a  doubt  he  is  solvent  and 
can  meet  his  payments  with  the  necessity  of  only  the  oc- 
casional indulgence,  a  good  plan  is  to  apply  directly  to 
the  creditor  holding  the  note  for  a  temporary  loan  or  a 
renewal  of  such  part  of  the  note  as  he  is  unable  to  pay. 
This  application  should  be  early  enough  to  avoid  a  protest 
of  the  note,  and  the  money  for  the  part  paid  and  the  new 
note  for  the  balance  should  be  forthcoming  before  the  note 
matures.  It  opens  the  way  to  a  bad  habit  to  suffer  a 
note  to  be  protested,  or  held  over  when  it  can  be  possibly 
avoided. 

In  all  cases,  when  such  a  favor  is  solicited,  or  from  any 
cause  any  extra  time  is  taken,  interest  for  the  time  should 
always  be  added  in  making  payment.  It  is  not  a  pleasant 
way  that  dealers  sometimes  have,  when  such  a  favor  has 
been  granted,  to  say,  "  I  will  pay  you  the  interest  if 
you  wish,"  with  a  look  and  tone  that  says  plainly,  "  you 
ought  not  to  wish  it."  Unless  the  wholesale  dealer  is  one 
who  insists  on  strict  obedience  to  business  rales,  by  those 
he  deals  with,  at  the  risk  of  being  thought  ilHberal,  he  is 
very  apt  to  say,  if  the  interest  is  trifling  in  amount,  "  it  is 
of  no  consequence,"  even  though  he  thinks  that  grati- 
tude ought  to  induce  the  favored  party  to  pay  without 
hesitation-. 

Most  generally,  an  occasional  favor  of  this  kind,  whea 
the  interest  is  cheerfully  and  readily  paid  as  though  the 
favor  was  appreciated,  will  be  granted  with  pleasure,  and 
without  any  particular  disparagement  to  the  retailer's 
credit.     In  truth,  occasional  instances  of  this  character 


'Paying  Interest  and  ExcJiange, 


213 


sometimes  induce  greater  confidence  in  the   debtor,  m 
showing  his   honorable   appreciation   of    favors,   and   his 
systematic  way  of  doing  business.      Men  fear  to   give 
credit  more  from  danger  of  a  bad  heart  in  the  debtor, 
than  they  do  from  a  weak  head.     They  are  pretty  gen- 
erally wiUing  to  take  a  reasonable  risk,  if  they  can  only 
feel  sure  that  the  person  they  credit  will  be  honest  and 
do  the  best  he  can  under  the  circumstances ;  and  when  ho 
can  not  pay  promptly,  they  prefer  to  help  him.     A  debtor 
who  craves  such  favors,  and  then  shows  his  want  of  hon- 
est principle,  by  subtle  efforts  to  evade  paying  the  m- 
terest,  loses— if  mercantile  standing  could  be  valued  by 
doUars— a  hundred  times  more  than  the  interest  m  ques- 

"^These  little,  or  comparatively  little,  matters  show  the 
retailer's  character.     Another  smaU  one  often  has  great 
inflnence-that  of  discount  on  uncurrent  money,  or  ex- 
change on  a  note  or  check,  payable  at  some  place  more  or 
less  distant  from  the  place  where  the   debt  is  created. 
Sometimes,   after    much    wrangling    and    ill-feeling     the 
wholesale  dealer  may  accept  the  currency  or  the  check 
and  the  retailer  has  thus  "  shaved  »  him  out  of  the  amount 
of  the  exchange,  but  if  he  could  know  at  what  a  loss  of 
reputation  he  has  made  the  amount  in  question,  he  would 
hesitate  before  repeating  the  transaction.     Possibly  a  r^ 
tailer  by  such  petty  meanness  may  make  fifty  or  a  hundred 
dollars  a  year,  but  it  is  done  at  such  a  loss  of  character 
that  he  finds  few  honest  men  envy  him  his  reputation  or 

money  either.  /v»  •     j. 

The  retailer  who  has  with  due  caution  left  sufficient 
mar-in  for  contingencies,  in  all  his  calculations  of  the  rela- 
tive'amounts  and  periods  of  purchases  to  his  sales  and 
collections  will  often  find  himself  in  possession  of  money 
in  advance  of  the  maturity  of  his  payjnents.     This  is  a 


214 


Anticipalhig  ^aymenJs, 


^  ^Preliminary  e7iquiry  thereto. 


215 


great  trouble  to  some  weak  minds — to  bave  too  much 
money.  The  difficulty  may  be  surmounted  in  a  bad  way, 
as  some  do,  by  using  the  money  to  speculate  in  wheal;, 

'  cotton,  wool,  or  other  produce  ;  or  by  the  purchase  of  cor- 
ner lots  in  some  embryo  city  in  Iowa  or  Kansas ;  or  by 
lending  it  to  a  neighbor,  who  is  "  hard  up,"  at  a  high  rate 
of  interest ;  or  even  in  buying  lottery  tickets  :  all  pretty 
sure  ways  of  investing  it  so  permanently  that  the  owner 
will  not  be  troubled  with  it  again,  nor  get  it  back  to  pay 
his  bills  when  they  are  due.  A  good  way  to  use  such  a 
surplus,  is  in  anticipating  the  retailer's  own  indebtedness, 
and  making  something  by  the  discount.  There  is  scarcely 
any  use  to  which  a  solvent  man  can  so  profitably  put  any 
spare  cash  he  may  happen  to  have,  as  in  paying  his  debts 
whether  they  are  due  or  not.  People  who  have  not  had 
much  experience,  sometimes  think  the  comparatively 
small  discount  they  get  bears  no  comparison  to  what  the^,^ 
might  make  by  some  temporary  or  speculative  invest- 
ment, but  mature  experience  teaches  otherwise.  When 
one  owes  nothing,  the  money  which  he  may  have  on  hand 
is  his,  to  do  with  as  he  pleases,  honestly,  of  course.  Bat 
when  he  is  in  debt,  he  should  remember  his  creditors,  and 
their  claims.  * 

When  a  retailer  is  prepared  to  anticipate  some  of  hi» 
payments,  it  will  be  proper  for  him  to  consider  whether  he 

^hall  discount  those  soon  to  become  due,  or  others  more 
remote.  The  rate  of  discoxmt  will  generally  be  greater  the 
farther  the  day  of  payment  is  off,  and  the  temptation  will 
often  be  to  get  the  greatest  discount.  If  this  course  va 
adopted,  it  may  turn  out  that  he  will  be  short  of  funds  to 
meet  the  claims  falling  due  earlier. 

It  becomes  necessary,  therefore,  to  notice  how  it  hap- 
pens that  the  cash  is  in  surplus,  whether  it  arises  from 
the  natural  profits  or  increase  of  the  business,  or  whethei* 


from  some  of  the  sales  or  collections,  or  both-bemg  made 
earlier  thwi  was  calculated.  In  the  former  case  he  ^iJd 
use  the  surplus  cash  to  discount  wherever  it  would  be 
most  to  his  advajitage.  In  the  latter,  he  would  have  to 
fear  that  the  sales  or  collections  in  the  following  months 
wbuld  be  short  just  in  proportion  as  they  were  over,  m  the 

then  recent  past.  x^  ^f 

If,  for  instance,  a  dealer  should  make  his  estimate  of 
$3,000  as  the  probable  amount  he  would  sell  m  the  coming 
month  of  April,  and  should  create  an  indebtedness  facing 
due  that  month,  which,  with  current  expenses,  would  about 
require  the  $3,000  to  cover,  an  unusually  early  sprmg 
Jght  cause  a  demand  for  his  goods  m  March,  so  that 
$1^000,  of  the  $3,000  to  be  sold  in  April,  are  sold  a  month 
earlier  and  at  the  end  of  the  month  of  March  he  has  the 
$1,000  in  surplus  of  his  payments.    But  it  would  be  very 
Lsafe  under  such  circumstances,  to  use  it  to  pay  debts 
falling  due  in  June  or  July,  as  the  sales  would  very  Proba- 
bly  fall  off  in  April,  and  he  would  therefore  not  take  in 
enough  to  pay  his  April  indebtedness.  ,,_... 

Sometimes'though:  it  might  be  safe  to  conclude  that  the 
whole  season  would  continue  to  be  in  advance  of  calcula. 
tions.  Of  this  the  dealer  could  judge  by  looking  over  the 
character  of  the  goods  then  seUing,  and  comparmg  them 
v^r^ll  sales  of' ormer  years,  and  noticing  whether  ce. 
tain  clasps  of  goods  were  sold  to  the  same  c^^me^rs  ui 
advance  of  the  time  when  they  were  sold  to  them  m  pre- 

"Tno'Sfficulty  of  this  kind  is  seen,  and  the  anticipation 
of  receipts  of  money  for  the  next  month  or  two  seems 
ulelyrbe  reali^d,  there  is  nothing  that  should  prev^it 
the  dealer  from  discounting  wherever  he  can  get  the  great- 

est  interest  off.  _  j  ui«  .r^^« 

It  is  always,  however,  a  matter  of  commendable  pru- 


216 


What  to  Anticipate, 


dence,  to  accept  one  or  two  jjer  cent  per  annum  less  dis- 
count, and  take  up  the  nearer  indebtedness,  so  as  to  1)(j 
on  the  safe  side.  There  is  another  matter  that  should 
sometimes  govern  the  selection.  The  dealer  may  be  buy- 
ing more  heavily  than  usual  of  some  houses,  or  may  de- 
sire soon  to  buy  more  goods  of  them,  and  know  that  his 
limit  of  credit  there  is  reached.  It  w^ould  be  good  pol- 
icy to  select  such  indebtedness  in  preference  to  others 
from  whom  he  is  not  likely  to  want  more  goods  before^ 
their  bills  regularly  mature.  As  these  larger  creditors 
are  apt  to  be  the  ones  who  have  known  him  best,  and 
sold  him  goods  at  the  lowest  prices,  whereby  he  became 
for  his  own  profit  more  largely  indebted  to  them,  it  isi 
often  the  case  that  they  are  unwilling  to  give  him  so  large; 
a  discount  for  pre-payment  as  others  can  afford  to  give 
who  have  charged  him  the  higher  prices.  But  this  should! 
not  influence  the  dealer  to  pass  them  by  in  discounting 
his  paper.  It  is  better  to  deal  so  as  to  retain  old  friends, 
than  to  merely  secure  new  ones. 


CHAPTER    XV. 

ON   THE    DEPRECIATION    OF    GOODS. 

IT  may  be  taken  as  a  general  principle  that  all  the 
goods  comprising  the  stock  of  a  retailer  depreciate  in 
value  from  day  to  day,  and  therefore  from  the  mere  delay 
m  disposing  of  them  losses  will  occur.  There  are,  of 
course,  some  exceptions  to  this  general  rule,  but  the  re- 
tailer should  wisely  adopt  it  as  his  rule,  and  sell  off  his 
s:oods  as  quickly  as  possible,  nor  think  that  any  thing  will 
appreciate  in  value  by  keeping  it  for  a  time  longer.  This 
depreciation  is  the  result  of  diverse  causes :  the  decay  of 
material,  the  fading  of  colors,  the  "  moth  and  rust  which 
corrupt,"  is  inherent  in  all  that  man  produces,  and  are 
the  instruments .  of  a  large  part  of  this  depreciation  but 
in  addition  to  these,  the  progressive  science  and  invention 
of  man  yearly  discovers  and  invents  new  processes  and 
new  methods  by  which  the  same  quality  of  goods  is  more 
cheaply  produced,  or  a  better  or  more  desirable  article 
for  the  same  money,  and  through  which  the  former  man- 
ufacture is  made  less  valuable.  Fashion  or  the  love  of 
novelty  and  change  also  has  a  great  influence  on  the  value 
of  many  articles.  Ordinarily  retailers  do  not  sufficiently 
regard  this  depreciation.  Old  goods — soiled,  faded,  tar- 
nished, rumpled  or  out  of  fashion,  because  they  cost  six 
months  before,  or  perhaps  still  longer  back,  a  certain 
price,  are  held  at  the  full  original  price,  when  there  is, 
owing  to  these  circumstances,  a  depreciation  of  possibly 
one-fourth  their  value. 

The  consequence  is,  that  such  goods  instead  of  being 

19 


i 


I » 


it 


218     ^he   Value  of  the  Ornamentation  on  Goods^ 

sold  off  are  suffered  to  remain  season  after  season,  eatmg 
themselves  up  in  interest,  a  hindrance,  too,  to  the  purchase 
of  other  goods  for  similar  uses,  which  would  sell  at  a 
profit. 

Perhaps  one  cause  of  this  retention  is  a  disposition  on 
the  part  of  the  dealer  to  consider  too  much 'what  he  is 
pleased  to  call  the  intrinsic  quality  of  the  goods,  or  that 
quality  which  enables  them  to  subserve  the  purpose  of 
their  manufacture  in  the  useful  or  practical  part.  For- 
getting, that  in  this  age  of  the  world  there  is  hardly  an 
article  in  use,  that  in  addition  to  its  mere  quality  of  use- 
fulness, has  not  something  added  to  it  by  way  of  embel- 
lishment to  please  the  eye — some  addition  of  finish,  color 
or  ornament,  not  absolutely  necessary  to  its  use,  and  yet 
which  the  buyer  would  not  dispense  with  without  a  re- 
duction in  price.  A  piece  of  cloth,  which  by  exposure 
has  lost  its  lustre,  and  its  freshness  of  color,  may  still  be 
just  as  warm  and  durable  when  made  into  a  coat.  But 
it  has  lost  in  value  by  the  loss  of  these.  How  much  the 
loss  may  be  will  depend  upon  its  quality.  If  it  is  fioe, 
the  lustse  and  color  are  very  essential  parts  of  its  value, 
as  without  these  it  could  not  make  a  handsome  coat.  If 
of  coarser  fabric,  and  originally  only  designed  for  making 
a  warm,  durable  garment,  it  has  lost  much  less ;  though 
as  before  remarked,  this  quality  which  may  be  terracjd 
the  ornamental  part,  in  comparison  with  the  other  quality 
which  is  often  called  the  useful^  is  inherent  in  some  de- 
gree to  almost  every  thing  in  which  a  retailer  trades. 

In  some  goods  intended  for  ornamentation,  the  value 
lies  altogether  in  this  fancy  part,  and  yet  it  is  not  unusual 
to  see  such  goods  in  retailers'  hands,  devoid  of  all  beauty 
by  reason  of  their  age  or  exposure,  still  regarded  as  nearly 
of  their  original  value,  because  forsooth  the  material  is 
just  as  durable  as  at  first. 


:;ind  its  JFleeting  Character, 


219 


There  is  nothing  that  will  depreciate  so  rapidly  as  such 
ornamentation  when  the  fashion  changes.  Of  what  pro- 
portional value  as  compared  with  their  original  price 
would  the  wide  hat-bands  now  have,  so  unlversallyworn 
on  the  Kossuth  hats  twenty -five  years  ago;  or  the 
heavy,  gimp  and  cord  fringes  worn  on  ladies'  cloaks 
thirty  years  ago ;  or  the  antique  glass  pendants  to  the 
chandeliers  still  seen  in  some  of  the  old  churches  ?  Pro- 
bably not  one-half  their  original  cost,  and  really  not 
worth  anything  except  some  other  than  the  original  use 
could  be  found  for  them.  As,  if  they  should  be  used  for 
ornamentation  on  any  modem  article,  they  would  tend  to 
decrease  the  value  of  the  article  rather  than  increase  it,  as 
was  the  intention  in  their  original  use. 

There  are  hundreds  of  other  articles,  especially  those 
connected  with  dress — such  as  bonnet  ribbons,  dress  trim- 
mings, fancy  neck  ties,  ornamental  buttons,  frogs,  etc.,  in 
which  the  depreciation,  though  it  may  not  be  so  exten- 
sive, is  still  great. 

Fashion  is,  after  all,  only  the  exercise  of  the  natural 
desire  of  the  human  breast  for  something  new  and  more 
beautiful — the  same  disposition,  we  may  suppose,  that  an- 
imated the  Athenians  eighteen  hundred  years  ago,  who 
as  Saint  Paul  tells  us,  were  continually  seeking  to  hear  or 
to  tell  some  new  thing.  Hence  there  is  a  close  relation- 
ship between  the  losses  on  old  styles  by  the  advent  of 
new  fashions,  and  the  losses  by  the  introduction  of  new 
articles  of  useful  character,  which  on  account  of  their  ad- 
vantages over  the  old,  in  point  of  convenience,  durability 
or  simplicity,  supplant  the  older,  which  continue  to  en- 
cumber the  retailer's  shelves,  greatly  to  his  loss. 

Take  as  an  instance  the  changes  occurring  within 
thirty  -  five  years  in  the  artificial  light  used  in  private 
families.    For  a  long  time  prior  whale  oil  was  in  use. 


220 


The  Three  Causes  of  Depreciation, 


Introduction  of  Improved  Articles, 


221 


with  suitable  lamps  for  that  article.  Then  lard  and  lard 
oil  came  into  use,  requiring  a  different  arrangement  of 
lamp.  Then  camphene,  with  another  style  of  lamp.  Then 
followed  burning-fluid  with  another.  And  lastly  coal 
oil  with  still  a  different  kmd  of  lamp.  These  changes 
are  not  alone.  In  most  instances  there  have  been  various 
improvements  in  the  lamps  used  for  burning  the  same  ar- 
ticle. Each  improved  lamp  of  course  largely  depreciating 
the  value  of  those  before  used. 

This  is  but  one  instance,  perhaps  an  extreme  one,  cf 
the  depreciation  which  a  retailer's  stock  is  subject  to  from 
the  discoveries  and  inventions  of  the  age  on  a  class  iA 
goods  too,  which  might  ordinarily  be  considered  of 
stable  character.  Who  now  buys  at  anything  near  the 
original  value  the  old-fashioned,  two-pronged,  ivor^r- 
handled  table  forks,  brass  door  knobs,  knockers,  or  the 
many  other  things  of  like  character  that  are  sometira€!S 
still  seen  on  retailers'  shelves? 

The  causes  or  origin  of  this  depreciation  may  therefore 
be  properly  and  conveniently  divided  for  consideration 
under  the  three  heads,  viz : 

1.  From  the  introduction  of  improved  articles  better 
suited  to  supply  the  demand  or  want. 

2.  From  the  change  of  fashion. 

3.  From  decay,  rust,  corruption,  etc. 

Generally  the  first  of  these  influences  is  not  difficult  to 
guard  against.  This  change  from  the  use  of  one  article 
to  another  by  the  community,  is  quite  gradual.  If  the 
dealer  has  any  reasonable  perception  and  judgment,  he 
will  notice  the  change  going  on,  and  avoid  purchasing 
the  older  style  of  goods  timely  enough  to  dispose  of  nil 
he  may  have  of  them.  Too  often  though  there  is  a  temp- 
tation to  make  another  purchase,  because  some  customer 
who  has  not  seen  the  advantages  of  the  new  style,  still 


asks  for  the  old.  If  this  new  article  is  a  real  improve- 
ment on  the  old  one,  the  dealer  can  by  pointing  out  the 
merits  of  the  new,  generally  induce  his  customer  to  pur- 
chase it  in  preference  to  the  old.  Sometimes,  too,  there 
is  an  inducement  to  buy  the  old  style,  because  it  is  offered 
cheaper.  The  wholesale  dealer  who  sees  the  tendencies 
of  the  trade,  being  desirous  of  selling  off"  his  stock  of  the 
old  goods,  reduces  very  materially  the  price,  and  without 
much  reflection  on  the  reason  why  the  price  is  reduced, 
the  retailer  buys  largely ;  too  much  so,  for  his  ordinary 
sales,  but  far  too  largely  in  view  of  the  circumstance  that 
the  article  is  being  supplanted  by  something  preferable. 
It  would  be  better  at  such  times  for  the  retailer  to  re- 
duce the  price  of  what  he  might  have  of  the  article  in 
his  stock,  so  as  to  sell  it  off  before  the  introduction  of  the 
new  becomes  so  general  that  he  will  be  una\)le  to  sell,  ex- 
cept at  a  much  greater  reduction.  It  is  better  even  to 
risk  the  loss  of  a  few  sales  through  not  having  the  old 
goods,  than  to  have  them  and  lose  by  not  being  able  to 

sell  them. 

Losses  through  changes  of  fashion  are  more  difficult  to 
guard  against.  The  operations  or  workings  of  the  fash- 
ionable whim  are  so  unexpected  and  sudden  often,  that  it 
might  well  puzzle  the  wisest  to  foresee  them.  Nor  will 
it  be  expected  that  entire  immunity  can  be  obtained. 

The  best  general  rule  is  to  cut  short  the  loss  as  soon  as 
possible  after  the  fashion  changes,  by  selling  the  goods  at 
once  at  the  best  price  they  will  bring.  There  is  generally 
a  short  interval  between  the  first  introduction  of  a  new 
fashion  and  the  entire  going  out  of  the  old,  and  a  re- 
duced price  is  otten  an  inducement  for  some  customer  to 
still  prefer  the  old. 

In  articles  of  dress  especially,  which  usually  change 
more  or  less  in  style  at  every  coming  season,  there  will 


I 


I 


222  Setting  off  the  Old  Styles  Tromptty, 

< 

always  be  found  some  persons  who,  either  not  having  the 
means  or  the  inclination  to  purchase  the  new  style,  con- 
tinue to  wear  the  old. 

This  circumstance  retains  for  the  old  style  in  the  re- 
tailer's hands  a  partial  value,  greater  or  less  in  propor- 
tion to  the  comparative  numbers  of  the  community  who 
continue  to  use  it.  But  the  season  following  fewer  will 
be  found  wearing  it,  and  every  succeeding  season  shows 
still  fewer,  until  at  last  the  old  garments  are  worn  out ; 
and  in  the  mean  time  the  goods,  if  any  are  left  in  the  re- 
tailer's hands,  have  become  comparatively  worthless,  as 
from  their  antiquated  and  odd  appearance  no  one  will  buy 

them. 

The  great  aim  of  the  dealer  should  be  to  sell  off  all 
such  goods  the  same  season  in  which  they  are  bought, 
even  if  toward  the  season's  close  they  have  to  be  sold  at 
cost ;  and  that  too  even  when  the  dealer  may  think  that 
there  will  be  no  great  change  in  the  fashion  for  another 
season  more.  When  there  are  already  indications  of  a 
change  of  fashion  for  the  next  season  they  should  be 
sold  at  less  than  cost,  if  necessary.  No  matter  how  great 
the  reduction  seems  to  be,  the  loss  will  not  be  so  great  as 
it  will  be  if  they  are  kept  over  until  the  next  season. 

When  a  dealer  finds  himself  with  a  variety  of  styles 
of  such  goods  that  are  going  out  of  fashion,  and  the 
quantity  is  too  large  for  him  to  expect  to  sell  them  all 
the  same  season,  and  he  can  not  profitably  exchange  them 
in  the  wholesale  house  where  he  purchased  them,  for 
other  goods,  it  is  a  good  plan  to  select  out  some  of  the 
varieties  wherein  the  special  fashion  is  least  prominent, 
and  pack  them  away  carefully  out  of  sight,  keeping  ex- 
posed only  so  many  of  the  most  ultra  fashionable  as  he 
can  dispose  of  during  the  season.  These  he  can  make 
special  efforts  to  sell  off,  and  when  the  next  season  comes 


Styles  and  Colors  which  are  More  'Permanent,    223 

round  the  reserved  portion  when  brought  out  will  look 
fresher  and  better  to  the  dealer  and  his  clerks,  and  that 
is  a  great  part  of  the  work  of  making  them  saleable.  If 
they  are  brought  out  with  the  incoming  of  new  goods, 
they  will  often  be  accepted  as  new  goods,  and  the  chance 
of  a  ready  dale  is  much  increased  over  what  it  would  be 
if  the  goods  had  been  kept  open  to  vievT  and  frequently 
seen  by  the  customers  daring  the  previous  season ;  and  by 
such  exposure,  in  addition  perhaps,  become  somewhat 
shopworn  or  faded* 

Such  fashions  or  styles  of  goods  aS  really  are  graceful 
and  becoming  to  the  wearer,  may  be  relied  on  to  continue 
longer  in  vogue  than  those  which  have  no  such  advan- 
tages. Thus  in  colors,  light  green,  light  blue  and  pink, 
and  all  light  shades  of  red,  are  becoming  to  a  Uond  or 
fair  complexion ;  and  orange  and  shades  of  yellow  give 
an  unpleasant  reflection.  While  to  a  brunette  orange 
and  brownish  yellow  are  becoming,  and  the  more  delicate 
colors  above  mentioned  are  productive  of  disagreeable 

contrasts. 

Accordingly,  therefore,  aS  the  wearers  in  any  special 
locality,  or  those  among  them  who  more  especially  lead 
the  fashions,  are  blonds  or  brunettes,  will  certain  colors 
continae  longer  or  shorter  in  vogue  in  that  community. 

It  is  a  noticeable  fact  that  persons  who  dress  in  colors 
other  than  white  and  black,  seldom  repeat  in  the  purchase 
of  a  new  garment  the  color  of  the  old.  This  arises  part- 
ly from  a  love  of  variety  and  partly  that  their  acquain- 
tances may  notice  that  they  have  a  new  garment,  which 
they  might  not  when  the  color  is  the  same  as  the  old  one. 
When,  therefore,  any  si>ecial  color  has  been  worn  so  gen- 
erally that  every  one  seems  to  have  had  a  supply  of  it,  it 
is  not  good  policy  to  purchase  much  of  it  the  succeeding 
season.    Nor  is  it  likely  to  be  in  demand  until  some  time 


224 


21ie  Declininff  Siage  in  JPctshions, 


after  all  the  old  garments  are  worn  out.  The  retailer 
should  take  pains  to  sell  off  all  such  colors  as  have  been 
.  thus  some  time  in  fashion,  especially  if  they  are  of  irreg- 
ular and  unusual  shades,  dear,  definite  colors,  as  blue, 
green,  purple,  brown,  etc.,  always  sell  more  or  less  ;  but 
there  are  often  intermediate  shades  of  color,  that  are 
brought  out,  and  look  very  well  while  they  are  new,  that, 
after  being  worn  for  a  season  or  two,  fail  to  please  longer, 
and  are  discarded  forever.  A  year  or  two  after  these 
colors,  which  were  regarded  as  very  beautiful  when  they 
first  came  out,  look  very  odd  and  distasteful,  and  can  not 
be  sold  except  at  a  great  sacrifice. 

A  retailer  must  not,  however,  too  hastily  decide,  because 
a  certain  color  has  prevailed  extensively  for  a  season, 
that  it  will  not  sell  the  next.  Much  depends  upon  the 
class  of  customers  he  has,  or  perhaps  rather  the  variety 
of  classes. 

The  adoption  of  any  new  color  in  the  fashionable  world 
is  first  by  those  who  purchase  only  the  finer  quaUty  of 
goods.  Generally  there  will  be  only  a  limited  quantity  of 
these  fine  quaUties,  and  many  who  desire  the  color,  but 
can  not  afford  it  in  such  expensive  goods,  will  purchase  it 
the  next  season  when  it  is  reproduced  in  inferior  qualities 
for  the  general  trade.  The  supply  may  not  even  be  ade- 
quate to  the  demand  the  second  season,  and  on  that  ac- 
count  it  will  sell  the  third  season.  When  a  retailer  notices 
that  his  less  fashionable  customers  talk  of  being  "  tired  of 
seeing  the  color,"  he  may  regard  it  as  an  indication  that 
its  day  is  passing  away. 

Changes  of  style  in  form  or  fashion  of  any  article  are 
governed  by  similar  rules  as  the  colors,  and  as  the  article 
is  convenient  and  comfortable  in  the  use  and  graceful  in 
form,  it  will  be  retained  in  vogue  longer  than  when  it  is  of 
the  opposite  character. 


If^uri(ms  Changes  to  which  Goods  are  Ziable,  225 

The  last  cause  to  be  noticed  for  depreciating  the   re- 
tailer*8  stock,  is  that  which  arises  from  its  perishable  na- 
ture.    In  some  kinds  of  business  this  may  be  a  very  se- 
rious risk,  but  ordinarily  it  is  one  which  may  be  much  re- 
duced by  the  care  and  attention  of  the  proprietor.     The 
extent  to  w^hich  a  retailer  loses  by  these  causes  may  be 
very  appropriately  taken  as  a  criterion  of  the  attention 
he  gives  to  the  details  of  his  business.     If  goods  are  per- 
mitted to   remain   exposed  to  dust,  light,  frost,  water, 
moths,  vermin,  etc.,  which  may  be  injured  thereby,  or  care 
is  not  taken  to  protect  against  chemical  changes,  as  sour- 
ing, moulding,  rustmg  or  the  like,  the  losses   in  this  way 
will  be  quite  large  in  the  course  of  a  year.     Even  with 
the  greatest  care  and  attention  there  will  be  considerable 
loss.     Any  dealer  who  will  for  one  year  keep  an  account 
of  the  losses  he  incurs  in  this  way,  which  losses  are  often 
covered   up   or  lost  sight  of,  by  a  sale  of  the  article  80 
damaged  at  a  reduction,  but  still  not  below  cost,  will 
find  that  the  matter  is  of  more  serious  importance  than 
he  has  been  wont  to  suppose.     Although   the  loss  may 
not  be  be  felt  so  heavily  when  an  article  costing  a  dollar 
and  which  ordinarily  retails  at  one  dollar  and  twenty-five 
cents,  is  sold  at  cost,  on  account  of  some  such  damage  as 
mentioned,  it  is  none  the  less  a  loss  of  twenty-five  cents. 
When  any  damage  of  this  kind  occurs  to  the  goods,  it  is 
good  policy  to  sell  them  off  quickly,  making  the  loss  at 
once.     There  is  too  often  a  hope  that  they  can  be  sold  by 
and  bv  without  much  reduction,  and  in  the  mean  time  they 
taint  by  their  presence  the  character  of  the  whole  stock. 
It  should  be  remembered  that  the  damage  generally  ap- 
pears greater  to  the  customer  than  it  does  to  the  owner. 
A  prompt  realization  of  the  extent  of  the  loss  is  more 
likely  to  have  a  beneficial  influence  on  the  dealer,  induc- 
ing him  to  guard  against  the  danger  another  time. 


1 


226 


On  Trotecling  Goods  from  IDamaf/e, 


The  methods  of  guarding  against  such   damages  are 
BO  various  and  generally  so  well  known  that  it  is  hardly 
worth  while  to  take  up  the  space  necessary  to  present 
them,  and  the  time  of  the  reader  to  read   them.    Tho 
same  character  of  injuries  occur  in  the  private  household, 
and  every  experienced  housekeeper  knows  how  to  guard 
her  stores  from  such  calamities.     The  difficulty  with  the 
trade  is  more  that  the  extent  of  the  loss   or  the   immi- 
nence of  the  risk  is  not  duly  appreciated  and  promptly 
guarded  against,  than  that  there  is  any  ignorance  of  the 
way  to  guard  against  it.     A  habit  attained  of  attending; 
to  such  things  at  once  when  noticed,  instead  of  the  dila- 
tory way  of  leaving  them  to  be  looked  after  to-morrow,, 
is  of  immense  importance,  and  is  a  great  step  va  lessen- 
ing the  losses.     A  bucket  of  brine  put  to-day  on  a  barrel 
of  pork,  together  with  the  stoppage  of  the  leak  in  the 
barrel,  may  save  a  considerable  sum,  which  would  be  lost 
if  the  work  is  left  for  that  "  to-morrow "  which  seldom 
comes. 

A  few  cents  spent  for  good,  stout  paper,  or  for  muslin 
for  wrappers  for  the  protection  of  delicate  goods  from 
dust  and  light,  is  often  money  well  invested.  A  simple 
and  inexpensive  muslin  shade  to  a  window,  to  be  drawn 
down  when  the  sun's  rays  enter  too  fiercely,  and  curtains 
to  protect  the  goods  from  dust  when  the  store-room  is  be- 
ing swept,  are  worth  a  hundred  times  their  cost  in  pro- 
tecting any  goods  which  these  may  injure.  In  short, 
keeping  the  eyes  open  and  using  common  sense  is  about 
all  that  is  required. 

The  tendency  to  deterioration  by  lapse  of  time  and 
necessary  exposure  in  selling,  is  so  great  on  many  articles 
that  it  is  always  desirable  to  keep  this  risk  in  view  in 
purchasing,  and  to  buy  no  more  than  can  be  disposed  of 
before  the  deterioration  can  take  place. 


The  Sest  V^ay  to  Avoid  these  fiisks* 


227 


It  will  be  noticed  that  the  losses  mentioned  in  this 
chapter  are  all  less  likely  to  occur  when  the  articles  kept 
for  sale  are  promptly  sold  off.  And  one  way,  therefore, 
to  avoid  some  of  this  risk,  is  by  attention  to  that  subject 
Whenever  goods  do  not  readily  sell,  the  investigation 
should  be  immediate  as  to  the  reason  why.  They  may 
be  too  fine  in  quality,  and  therefore  too  expensive  for  the 
customers — as  costly  silks  in  a  rural  community.  They 
may  be  too  dear  for  the  quality — really  worth,  as  com- 
pared with  other  goods,  only  seventy-five  cents,  when  a 
dollar  is  asked  for  them.  They  may  be  superceded  by 
other  articles — as  camphene  lamps.  They  may  not  match 
what  they  are  intended  to  be  used  with — as  parts  of  a 
machine.  Or  there  may  be  absolutely  no  need  for  them 
in  that  locality — as  fur-lined  gloves  in  New  Orleans. 

There  are  various  ways  that  such  things  may  be  dis- 
posed of.  If  too  dear,  the  price  reduced,  even  though  it 
leaves  no  profit.  If  superceded  by  other  articles — sent  to 
another  locality  where  the  article  is  yet  in  use,  or  altered 
so  as  to  be  made  available.  If  too  expensive,  or  other- 
wise not  suited  to  the  special  locality,  they  may  be  often 
advantageously  exchanged  at  the  place  where  bought  for 
others  that  will  suit. 

Attention  given  to  the  subject  while  the  articles  are 
newly  in  hand,  and  yet  in  the  season  for  selling  them, 
will  generally  open  up  some  way  to  get  them  off,  and  the 
losses  which  would  occur  by  leaving  them  six  months  of 
a  year  longer,  will  be  often  avoided. 


li 


^1^1 


The  Mysterious  Leaks  in  business. 


229 


CHAPTER  XYI. 

ON   LOSSES   BY   FIRE,   THEFT,   NEGLECT,  ETC. 

THERE  is  a  class  of  losses  which  a  retailer  is  subject 
to  in  common  with  the  rest  of  mankind,  that  r.re  not  in- 
cidental to  his  business;  some  of  which,  however,  he 
seems  liable  to  in  a  greater  degree  than  people  in  other 
occupations  are,  and  it  may  not  be  amiss  to  consider  them 
in  a  special  chapter. 

This  will  be  therefore,  to  some  extent,  a  continuation 
of  the  previous  chapter,  which  treated  of  losses  incidental 
to  the  goods  or  merchandise  of  the  dealer,  reducing  their 
value,  while  this  will  treat  of  risks  foreign  to  the  goods 
he  deals  in,  but  which  cause  a  total  loss,  and  will  suggest 
some  of  the  best  methods  for  guarding  against  them. 

These  risks  are  mainly  of  fire,  burglary,  shop-lifting, 
peculation,  giving  over  weight  or  measure,  and  omis- 
sions to  charge  goods  sold  on  credit* 

With  the  exception  of  the  first  two,  the  losses  are  of  a 
kind  which  beginners  in  business  often  fail  to  take  pre- 
cautions against,  or  make  allowances  for  in  their  calcula- 
tions, and  it  frequently  happens  with  these,  that  when  the 
year  expires  and  the  stock  is  inventoried  and  the  accounts 
made  up,  the  business,  w'hich  by  the  estimate  from  day  to 
day  seemed  so  flattering,  is  unexpectedly  found  to  have 
been  unprofitable  ;  or  at  least  with  a  profit  much  reduced 
from  the  estimates. 

The  dealer's  attention  will  be  then,  if  never  before, 
turned  to  the  possibility  of  losses  of  the  kind  refered  to 
as  an  elucidation  of  the  arithmetical  mystery — or  the  rea- 


son why  it  is,  that  the  two  and  two,  which  he  has  so 
carefully  added  together  day  by  day,  throughout  the  year, 
now  turn  out  to  be  thne  only,  and  not  four. 

The  most  common  supposition  will  be,  that  he  has  been 
"  robbed  "  in  some  way.    But  how  ?  or  by  whom  ?     By 
customers  shop  lifting  ?  or  by  clerks  pilfering  ?     Suspi- 
cion fastens  on  this  one  and  the  other ;  but  superficial  in- 
vestigation does  not  solve  the  mystery.     And  here  let  me 
give  °a  word   of  advice.     Do   not  think  it  is  a  trifling 
matter  that  the  year's  business   has  resulted  differently 
from  the  calculations.     Future  prosperity  will  greatly  de. 
pend  upon  the  discovery  of  the  reason  or  cause  for  the 
discrepancy  between  the  calculated  and  the  actual  result. 
Prove  your  estimate— make  reasonable  allowances,  but 
not  undue  ones,  for  the  minute  variations  from  the  calcu- 
lations which  will  always  occur  in  practical  business— and 
it  the  difference  can  not  be  accounted  for,  depend  upon  it 
there  is  a  leak  somewhere,  which  prudence  requires  should 
be  sought  out  and  stopped.    Never  think  such  leaks  small 
matters,  which  increased  attention  to  doing  more  business 
will  overbalance.    If  efforts  are  not  at  least  made  to  close 
them,  they  will  likely  increase  faster  than  the  business 

does. 

Losses  which  occur  by  fire  and  burglary  there  is  no 
mystery  about.  It  is  only  necessary  to  use  the  best  safe- 
guards. 

Those  which  occur  by  fire  are  best  prevented  by  guard- 
ing  carefully  the  heating  and  lighting  apparatus  of  the 
building,  and  the  storing  of  inflammable  goods  or  sub- 
gtances— these  being  mainly  the  avenues  through  which 

fires  occur. 

When  the  store-house  is  heated  by  a  stove,  the  flooy 
under  the  stove  should  be  well  protected  by  some  nonr 
combustible  substance— as  zinc,  sheet-iron,  brick  or  stone. 

20 


230 


Hisks  0/  Mr e  from  Stoves. 


and  any  wood-work  through  or  near  which  the  pipe 
passes,  should  be  protected  in  like  manner.  If  it  is 
warmed  by  a  furnace,  attention  is  required,  in  addition,  to 
the  hot  air  pipes  or  flues,  which  have  been  found  the  im- 
mediate cause  of  many  fires.  Philosophers  have  several 
times  demonstrated  that  hot  air  can  not  set  fire  to  wood, 
which  IS  doubtless  true,  and  yet  notwithstanding  fires  will 
occur  in  connection  with  hot  air  flues.  The  best  preven- 
tive of  this  result  is  to  have  the  registers  in  the  floor  set 
in  soap-stone  frames,  and  to  allow  of  no  wood-work 
within  one  inch  of  the  hot  air  pipes,  and  whenever  any 
of  the  wood-work  comes  withm  even  two  inches  of  them, 
to  protect  the  wood  in  such  close  neighborhood  by  a 
covering  of  tin  or  zinc. 

Occasional  attention  should  also  be  given  to  cleaning 
the  hot  air  flues  from  pieces  of  paper,  .shavings  or  other 
matter  of  like  character,  which  in  sweepmg  the  ware- 
room  readily  fall  through  the  register  and  moy  be  found 
lodged  in  the  curves  of  the  flue.  Should  a  lucifer  match 
be  among  such  contents— as  might  easily  happen,  the 
usual  place  for  any  which  do  not  readily  strike  fire  being 
the  store-room  floor — a  nice  little  arrangement  for  a  con- 
flagration is  prepared,  and  ready  to  go  into  operation  the 
first  night  when  a  full  fire  is  left  in  the  furnace  with  the 
draft  on.  It  does  not  take  a  large  quantity  ot  such  re- 
fuse when  on  fire,  to  heat  the  tin  of  the  flue  red  hot,  and  it 
needs  no  philosopher  to  tell  us  that  red  hot  tin  will  readily 
set  fire  to  contiguous  wood,  even  if  hot  air  will  not. 

The  proper  period  to  attend  to  such  precautions  for  pro^ 
tection  is  when  the  stove  or  furnace  is  first  put  in  place, 
and  when  too  often  the  mechanic  who  puts  it  up  is  left  to 
be  the  sole  judge  of  the  measure  of  protection  needed. 
The  dealer  should  be  cautious  in  getting  this  work  done 
by  contract,  as  there  is  danger  of  its  being  slighted.    He 


^ang^r  arising  from  Zarnps  and  Gas.         231 

should  himself  attend  to  such  protective  measures,  and  be 
the  judge  of  their  sufficiency  ;  taking  care  always  to  err 
on  the  safe  side,  and  be  well  protected. 

The  danger  of  fire  from  lights  is  principally  from  using 
inflammable  compounds  for  burning,  as  "  camphene  "  or 
"burning  fluid,"  and  the  occasional  bursting  of  the  lamps. 
Now  that  "  coal  oil"  is  in  vogue,  those  dangerous  fluids 
can  be,  with  economy  and  safety,  dispensed  with,  though 
even  this  requires  some  care  in  its  selection  to  get  a  safe 
article.    So  much  benzine  is  retained  in  the  distillation, 
or  subsequently  added  by  the  dealer  to  cheapen  the  cost, 
that  it  should  never  be  used  without  first  submitting  it  to 
some  simple  test  to  determine  its  quality.     Any  oil  which 
can  be  set  on  fire  by  a  lighted  match  is  unsafe  to  use.    A 
table  spoonful  warmed  to  about  blood  heat  is  sufficient  for 
a  test.    If  there  is  any  benzine  present  a  lighted  match 
stuck  into  the  oil  will  in  two  or  three  minutes  at  furthest 
cause  it  to  blaze  up  over  the  surface  like  alcohol  does 
under  similar  circumstances.     And  any  oil  which  submits 
to  such  a  test,  without  blazing,  may  be  safely  burned  m  a 
lamp.    When  the  price  of  the  coal  oil  is  high  and  the 
benzine  very  low,  there  is  a  greater  temptation  to  unprin- 
cipled manufacturers  and  dealers  to  adulterate  the  former, 
than  when  the  prices  are  nearer  alike. 

When  gas  is  used,  the ''pendants"  and  "branches" 
are  so  convenient  for  hanging  many  light  articles  on,  that 
they  are  often  appropriated  to  that  purpose,  or  the  goods 
are  sometimes  otherwise  placed  so  near  to  the  gas  burners 
that  a  slight  change  of  position  of  the  burner,  or  a  draft 
of  air  causes  them  to  take  tire.  To  prevent  this,  in  the 
first  place  all  gas  pendants  and  branches  in  a  store  should 
be  firmly  fixed,  so  that  they  cannot  be  moved,  and  thus 
brought  in  contact  with  combustible  matters  while  the 
gas  is  burning.    The  dullest  boy  in  a  store  wUl  gener- 


232 


Sale  of  Inflammable  Articles. 


J^eeping   Well  Insured, 


233 


ally  have  sense  enough  not  to  place  goods  in  such  a  posi- 
tion that  they  will  come  in  contact  with  a  fixed  light, 
but  the  most  intelligent  may  in  a  moment  of  haste  un- 
thinkingly change  the  position  of  a  moveable  gas-burnei-, 
and  place  it  dangerously  near  to  the  goods.  And  sec- 
ondly, articles  should  never  be  hung  on  or  near  the  gas 
pendants  or  branches ;  and  any  arrangement  of  wires 
or  frames  for  hanging  goods  on,  if  necessary  at  all,  should 
be  so  placed  as  that  the  goods  hung  on  them  are  fully 
three  feet  away  from  the  gas  burners. 

The  insurance  inspector  would  always  do  his  duty  to 
the  companies  that  employ  him,  if  he  were  to  report  as 
dangerous  all  retail  stores  where  goods  of  light  inflam- 
mable character  are  thickly  clustered  on  cords,  or  other- 
wise, in  close  neighborhood  to  the  gas  lights. 

Fires  sometimes  occur  through  the  keeping  for  sale  of 
specially  dangerous  articles,  as  lucifer  matches,  benzine, 
alcohol,    turpentine,    etc.      Such    goods   are   dangerous 
mainly  when  a  light  or  fire  is  brought  to  their  vicinity. 
It  is  therefore  a  good  custom  to  adopt  in  keeping  such 
articles,  to  place  them  all  in  one  locality,  and  in  such  a 
position  in  regard  to  the  permanent  lights  in  the  store- 
room, that  all  the  operations  of  dealing  them  out  can  be 
readily  performed   at   night  without  the  necessity  of  a 
hand  light.     It  is  well  too  to  so  place  them  that  there  is  no 
necessity  to  pass  near  them  frequently  with  a  light— in 
some  corner,  for  instance,  and  then  to  encourage  a  feeling 
that  that  is  a  dangerous  corner  to  take  a  light  to.     But 
this  should  not  induce  a  dealer  to  put  them  down  cellar, 
or  entirely  out  of  view,  as  is  sometimes  done,  where  at 
night  they  can  only  be  dealt  out  by  carrying  a  light,  as 
this  is  really  more  dangerous  than  the  open  store.  ^ 

It  is  not  often,  however,  that  a  fire  gets  headway  in  a 
store  during  the  time  it  is  occupied.    The  spark  or  flame 


in  its  embryo  stage  is  then  noticed,  and  that  which  m 
fifteen  minutes  would  have  been  an  ungovernable  confla- 
crration  is  easily  extinguished  with  a  wet  finger.  Hence 
it  is  always  prudent  as  ti.e  last  thing  before  leaving  he 
store-house  at  mght,  to  take  a  look  throuo:h  it  after  the 
licrhts  are  all  out,  lor  any  stray  spark  which  may  be  m 
w"aiting  like  a  mischievous  clerk  lor  the  departure  of  the 
principal,  to  have  a '' jrrand  flare  up." 

After  all  the  care  which  can  be  is  used,  to  c^uard  a-ainst 
the  occurrence  of  fire,  the  crownin-  woik  must  be  to 
keep  well  insured.  The  risks  which  a  dealer  incurs  from 
fires  caused  by  the  carelessness  of  contiguous  ne^rhbors 
or  the  ill  will  of  an  enemy,  can  only  be  covered  by  in- 

surance.  ,  «.  •  ^^ 

To  keep  xrdl  insured  means  not  only  to  have  sufficient 
insurance  to  cover  at  least  the  larger  portion,  if  not  all 
the  stock  of  goods,  but  also  means  that  it  should  be  in 
companies  which  are  able  to  pay,  and  in  the  custom  ot 
pavincr  their  losses  without  the  necessity  of  a  suit  at  law 
io  compel  them.     Avoid  all  insurance  companies  who^ 
names  are  frequently  seen  in  the  newspapers  as  defend- 
ants  in   law  suits.      Unusual   care   should  be  bestowed 
ou  the  language   of  the  insurance  policy,  that  it    uUy 
covers  the  risk,  and  thatUhere  is  no  "  proviso     or     ex. 
cention  "  or  "  condition,"  which  would  debar  you  from  re- 
covering in  case  of  a  loss.    It  is  not  safe  to  accept  the  as- 
surance of  the  agent  or  broker  that  "  it  i«  M  "R'^  ;  ^ 
many  new  clauses  are  from  time  to  time  interpolated  m 
the  "  policies"  or  «  annexed  conditions,"  that  every  one 
should   examine    for>  himself-carefuUy.  scrulimzmg  and 
weighing  the  meaning  and  scope  of  every  sentence  and 
word,  both  written  and  printed  in  the  "  policy,"  and  the 
"conditions  annexed."  to  see  that  all  is  there  that  he  re- 
quires, and  that  nothing  objectionable  is  intferpolated. 


234        The  '*  Conditions*'  of  the  Insurance  Toticy, 

Should   he  omit  to  do  this,  or  to  have  any  errors  or 
language  of  doubtful  meaning  corrected,  or   to  perform 
Bubsequently  what  may  be  required  of  hmi,  as  giving  no- 
tice of  other  insurance,  or  of  increased  risk,  he  may  open 
his  policy  some  unpleasant  morning  when  his  store-house 
IS  m  ashes,  to  find  that  he  has  insured  his  «  hazardous 
and  not  hazardous  "  goods  only,  while  by  the  ''  conditions 
annexed  "  to  his  policy,  three-fourths  of  his  burnt  stock 
was  ''extra  hazardous,"  and  of  course  not  covered  by  the 
"  policy ;"   or  that  if  he  have  *' policies  of  insurance,"  in 
two  different  companies,  and  he  has  omitted  to  give  each 
one  notice  of  the  other  insurance,  and  have  it  endorsed 
on  the  ** policies,"  neither  company  is  liable  by  the  "con- 
ditions,"  for  the  insurance  money ;  even  though  possibly 
(as  the  author  has  known  an  instance  of)   one  man  was 
agent  for   both   companies   when   the  policies  were  ob- 
tained. 

The  insured  should  always  give  himself  the  benefit  of 
the  doubt  adversely,  and  if  any  clause  or  languacre  in  the 
policy  seems  obscure  or  of  doubtful  meaning,  he  should 
construe  or  read  it  most  disadvantageously  to  himself. 
If  It  will  not  bear  criticism  in  this  aspect,  then  he  should 
have  the  language  made  more  exact  and  definite.     The 
true  legal  interpretation  of  any  doubtful  phrase  or  clause 
m  the  policy,  may  appropriately  be  referred  to  the  legal 
adviser  of  the  insured,  whose  special  business  it  is  to  d«^ 
cide  upon  such  matters,  but  the  general  scope  and  inten- 
tion  of  the  policy  can  not  with  safety  be   left  to  an  at- 
torney,   as   only  the   dealer   can  know  exactly  what  he 
wants  to  cover  by  the  insurance,  where  it  is  situated  and 
whether  he  is  actual  and  sole  owner  of  the  property  in- 
sured.   A   policy  may  be  perfectly  regular  and   legally 
binding,  and  pass   the    inspection    of   a    good   lawyer 
and  yet  through  a   wrong  number  to  the    store  hons/ 


The  Sesi  Troteclion  Against  burglars.       235 

or  some  other    apparently  trivial  error,  which  was  not 
within  the  lawyer's  special  province  to  enquire  about  or 
know,  the  "policy  "is  utterly  useless  as  a  pro  ectioi^  to 
SeTnsured.    As  a  single  instance  of  such  small  irregu  an- 
ties,  the  author  once  had  a  policy  made  out  and  sent  to 
hTm  by  an  insurance  company  of  high  standmg,  with  the 
insurance  written  out  as  on  '^  Dry  goods  not  hazardous 
with  the  premium  at  a  non-hazardous  rate,  by  a  special 
agreement  with  the  company.    Yet  on  turning  to  the 
inditions   annexed  to  the  policy,  ^^  ^ry  goods    w  re 
classed  as  "  hazardousr   Here  was  a  trifling  -^t^^;'  ^^^^^^^^ 
in  case  of  fire,  would  have  been  sufficient  for  at  least  a 
Technical,  and  perhaps  a  full  legal  defence  for  the  com- 
pany  in  any  suit  against  them.     At  least   sufficient  for  a 
costly  and  vexatious  litigation,  if  the  company  chose  to 
avail  itself  of  the  opportunity. 

A-ainst  burglars,  the  best  protection  is  a  continued  oc 
cupa;cy   of  some  part  of  the  ware-room  as  a  sleeping 
apartment  for  some  of  the   clerks,   especially  when  the 
store  is  a  detached  building  away  frorn  the  dwelling  of 
the  proprietor.     Burglars  rarely  try  their  skill  on   such 
places  when  so  occupied,  and  then  only  where  by  obser- 
vation  they  find  that  the  inmates  are  off  at  unseasonable 
hours  or  for  periods  of  undue  length.     Such  rascals  on  the 
lookout  for  opportmiities,  quickly  learn  that  certam  even- 
ings  in  the  week-until  perhaps  a  late  hour-the  store 
is  unguarded,  and  they  operate  on  such  a  night.     When 
those  who  thus  occupy  the  store  at  night  are  occasionally 
permitted  to  be  away  till  a  late  hour,  some  arrangement 
to  supply  their  place  is  desirable  ;  and  if  that  can  not  be 
such  absence   should  not   occur   on   regular  nights,  but 
should  be  so  irregular  and  uncertain  that  a  burglar  could 
not  rely  upon  the  absence  on  any  special  night. 


1 


236 


ZTsefut  Auxiliaries  to  iRepel  Thieves, 


It  is  a  very  common  impression  that  when  a  burglar 
makes  up  his  mind  to  break  into  a  building,  locks  and 
bolts  can  not  keep  him  out,  still  a  good  supply  of  su(;h 
precautions,  where  other  safeguards  cati  not  be  readily 
or  conveniently  secured,  will  often  deter  a  burglar  from 
making  the  attempt.  He  may  regai-d  all  the  plunder  he 
can  carry  away  as  not  compensating  for  the  trouble  and 
risk.  An  ordinary  window  shutter  with  the  common 
slide  bolt  is  easily  forced,  but  covering  the  inside  of  the 
shutter  with  sheet  iron,  and  using  a  long  bar  across  the 
window  to  fasten  jn  the  frame,  either  outside  or  inside 
the  shutter,  is  a  pretty  good  protection.  A  shutter  of 
strong  sheet  iron  fastened  in  the  same  way,  is  of  course 
still  better.  An  appearance  of  watchfulness  will  often 
deter  a  burglar  who  will  on  the  other  hand  be  invited  by 
slight  protections  or  a  neglect  of  precautions.  For  this 
reason  a  padlock  on  the  outer  door  is  a  bad  precaution,  as 
it  gives  notice  that  there  is  no  one  inside. 

A  light  left  burning  so  that  the  whole  interior  of  the 
store-room  can  be  seen  from  some  convenient  aperture  in 
the  front  door,  is  an  excellent  precaution  to  repel  burg- 
lars, especially  in  a  town  where  people  are  occasionally 
passing  along  the  street  at  all  hours  of  the  night.  If  a 
clock  be  prominently  placed  so  that  the  time  can  be  seen 
by  looking  through  the  aperture  of  the  door,  and  this  be- 
comes generally  known  to  the  residents,  it  will  often  be 
consulted  during  the  night  by  those  passing,  who  desire 
to  know  the  hour,  and  thus,  perhaps,  an  hourly  glance  at 
the  interior  of  the  store  will  be  made  ;  making  the  place 
entirely  too  conspicuous  for  a  burglar. 

Watch  dogs,  if  well  trained,  are  a  protection,  though 
ordinarily  not  very  reliable.  Still,  as  they  do  not  cost 
much  to  keep,  they  may  be  useful  as  an  auxiliary  to 
other  means. 


The  "  Shoplifters:' 


237 


The  losses  which  occur  from  shop-lifting  and  petty  steal- 
ing,  by  those  who  visit  the  store  in  the  guise  of  custo- 
mers,  is  in  some  localities   considerable.    This   class  of 
thieves  mostly   depredate  in  stores  where  there  is  not 
much  attention  bestowed  on  the  customers.    When  the 
business  of  selling  is  conducted  as  it  should  be,  and  the 
incomer  is  promptly  met  at  the  first  moment  of  entrance 
and  attended  to  with  perseverance  and  vigor,  and  not  lelt 
to  wander  about  the  place  in  an  aimless  manner,  from  one 
article  to  another,  losses  of  this  character  are  not  so  likely 
to  occur,  as  where  business  is  done  in  an  irregular  man- 
ner.    A  little  attention  will  soon  enable  a  salesman  to  re- 
cognize such  persons  as  he  should  be  suspicious  of,  for  this 
cause.    As  their  purpose  in  visiting  the  store  is  to  steal, 
not  to  buy,  they  do  not  interest  themselves  in  the  goods 
they  ask  for.    There  is  generally  an  aimlessness  apparent 
in  all  their  questions  concerning  the  goods  ;  they  no  soon- 
er look  at  one  article  than  they  want  another,  declining  the 
first  without  any  apparent  or  adequate  cause,  except  that 
of  turning  the   salesman's  supervision   away  m  lookmg 
for  the  other  articles  asked  for,  so  that  they  may  have  an 
opportunity  to  steal.    This   class   of  people  frequently 
operate  in  couples,  and  one  does  the  stealmg  while  the 
other  diverts  the  attention  of  the  salesman.    The  com- 
panion is  never  satisfied  to  remain  inspecting  the  goods 
or  hearing  the  negotiations,  but  wanders  off  apparently 
to  inspect  other  goods  which  may  be  casually  exposed, 
particularly  if  they  are  of  a  kind  readily  transferred  to 
the  pocket,  bag,  basket  or  other  receptacle  provided  for 
carrying  away  the  plunder.  ^^ 

"An  ounce  of  prevention  is  worth  a  pound  of  cure 
in  such  cases,  and  a  watchful  eye  kept  over  all  such  cus- 
tomers,  will  generally  succeed  in  preventing  depredations. 
This  class  of  people  do  not  like  to  be  publicly  known 


J 


238 


The  "Street  Thieves  J' 


The  l^eculation  of  J^mplojyees, 


239 


as  thieves,  and  hence  are  chary  of  exercising  their  p.ro- 
pensities  in  places  where  they  see  they  are  suspected. 
For  this  reason  it  is  not  safe  to  disregard  suspicious  cir- 
cumstances because  it  is  thought  the  person  is  "above 
such  things,"  "  an  old  customer,"  or  any  like  reason  to 
quiet  suspicion.  There  is  always  a  beginning  to  such 
practices,  and  it  may  be  for  the  advantage  of  the  person 
against  whom  suspicion  is  directed,  to  nip  them  in  the 
bud,  if  possible,  by  what  might  seem  harsh  suspicions, 
rather  than  by  a  blind  confidence  to  allow  such  a  ten- 
dency to  grow  into  practice  unheeded,  and  therefore  un- 
checked. 

In  villages  and  country  towns  it  is  a  common  custom  to 
place  outside  the  door  some  of  the  articles  kept  for  sale, 
as  a  sort  of  sign  of  the  character  of  the  business  within, 
and  these  goods  are  subject  to  the  depredations  of  a  still 
lower  class  of  thieves,  if  there  can  properly  be  any  va- 
riety of  class  among  those  where  all  are  base  and  vile. 
These  street  thieves  are  generally  half  their  time  in  jail 
for  petty  larceny.  Unlike  the  shop-lifters,  who  seem  often 
ashamed  of  their  conduct,  these  rather  glory  in  their  shame. 
Some  localities  are  much  infested  with  them.  Where 
they  abound,  the  best  way  to  guard  against  their  pilf Br- 
ings is  to  place  but  few  or  no  goods  out  in  the  way  mtjn- 
tioned,  and  to  fix  or  fasten  in  some  manner  those  that  are 
placed  out,  so  that  they  can  not  be  readily  snatched  up. 
It  does  not  need  that  they  should  be  very  permanently 
secured.  It  is  also  well  to  so  place  the  articles  that  they 
may  be  plainly  seen  from  the  interior.  This  alono  is  often 
sufficient  to  deter  the  thieves  from  attempting  to  take 
them.  "^ 

Losses   occurring  from   the   peculations  of  clerks  and 
employees,  are  perhaps  the  most  aggravating  of  any 


which  a  dealer  incurs.  It  is  hard  enough  to  lose  by  a 
stranger,  but  when  those  in  whom  we  especially  repose 
confidence  prove  unworthy,  and  rob  us,  it  is  doubly  ag- 
gravating. Fortunately,  like  all  other  risks  of  loss  to 
which  the  dealer  is  liable,  this  risk  may  be  much  limited 
by  careful  attention  to  the  matter.  With  many  persons, 
the  moment  a  salesman  or  clerk's  integrity  is  doubted, 
the  first  impulse  is  to  discharge  him ;  the  very  idea  of 
having  to  watch  those  who  are  employed  confidentially, 
and  partly  to  watch  others,  and  who  ought,  therefore,  to 
be  above  suspicion,  seems  equivalent  to  a  want  of  confi- 
dence in  the  integrity  of  the  employee.  If,  however,  the 
employer  of  clerks,  and  especially  of  very  youthful  ones,  as 
retailers  often  are,  would  regard  this  watchfulness  in  its 
true  aspect,  as  a  means  to  protect  and  guard  those  under 
him  from  the  strong  temptations  which  frequently  sur- 
round them  to  take  the  first  step  in  wrong-doing,  rather 
than  simply  as  a  means  of  detecting  those  who  have  not 
only  taken  the  first  step  but  possibly  many  more,  they 
would  see  that  there  is  no  incongruity  in  closely  watch- 
ing the  actions  of  one  in  their  employment,  in  whom  they 
are  at  the  same  time  reposing  great  confidence. 

**  I  can't  bear  to  have  anybody  about  me  that  I  must 
watch,"  is  the  language  or  at  least  the  thought  of  a  great 
many  dealers.  The  consequence  very  often  is  that  the 
clerks  seeing  their  employer  indisposed  to  scrutinize  very 
closely  their  doings,  are  led  on  from  one  step  to  another 
gradually,  from  what  may  seem  only  trivial  matters 
to  aggravated  guilt.  And  at  last  when  the  employer's 
eyes  are  open,  and  he  sees  that  something  is  wrong,  and 
the  honesty  of  the  employee  is  questioned,  without  trou- 
bling himself  to  certainly  detect  and  punish  the  cul- 
prit, he  simply  turns  him  off  in  maudlin  charity  to  prey 
upon  others,  taking  a  new  and  untried  person  to  fill  the 


240 


The  Cterkfs  Temptatit^s* 


place  who  has  to  go  through  the  same  temptations,  and 
perhaps  share  the  same  fate  eventually. 

While  it  must  be  admitted  that  there  are  a  great  niiany 
abandoned  and  incorrigible  thieves  in  the  world,  it  may 
be  questioned  whether  more  than  one  in  every  ten  became 
so  except  through  temptation  after  temptation.  Now 
restraining  the  propensity  and  withstanding  the  deisire, 
and  now  yielding  and  overborne.  And  through  this  pro- 
cess of  gradually  sinking  and  struggling  are  at  last  buried 
BO  deep  in  the  slough  of  iniquity  that  they  give  over  their 
efforts  to  struggle  out,  and  all  hope  of  extrication  and  re- 
formation is  at  an  end. 

Nearly  every  business  man  of  mature  years  has  per- 
sonally known  of  individual  instances,  even  if  they  have 
not  occurred  in  his  own  experiences,  and  they  are  doubt- 
less numbered  by  hundreds,  where  some  thoughtless  youth 
in  a  moment  of  temptation  has  purloined  from  his  em- 
ployer an  article  for  his  own  special  gratification  or  use, 
and  which  being  found  out,  exposed  him  to  public  ])un- 
ishment.  But  his  employer  confiding  in  some  virtuous 
traits  of  the  youth's  character,  was  pleased  to  act  the  ])art 
of  a  kind  parent,  rather  than  that  of  a  prosecutor,  and 
placing  before  the  culprit  the  horrors  of  the  abyss  into 
which  he  was  falling,  offered  forgiveness  and  oblivion  of 
the  past  offence,  if  there  was  reformation  for  the  future. 
By  this  merciful  course  the  erring  one  was  brought  to  a 
sense  of  his  guilt,  induced  to  restrain  his  desires,  and  re- 
sist the  temptations  surrounding  him ;  remaining  there- 
after a  faithful,  honest  and  reliable  employee. 

The  first  step  with  pilfering  employees  is  the  taking  of 
some  comparatively  trivial  article  for  their  own  personal 
use  or  enjoyment.  It  may  be  only  a  few  sheets  of  paper 
or  envelopes,  or  such  matters  that  he  knows  he  would  get 
for  the  asking.     Sometimes  clerks  are  permitted  to  i:>ur- 


JRirst  Steps  in  Crime, 


241 


chase  any  article  kept  for  sale  for  their  own  use,  and  are 
expected  to  keep  their  own  account  of  it,  or  make  the 
payment  therefor  without  referring  the  matter  to  the  em- 
ployer or  any  one  else.  This  often  leads  to  pilfering. 
The  clerk  wants  the  article  to  use  now,  he  has  no  money 
to  pay  for  it,  but  he  will  recollect  it,  and  pay  for  it  when 
he  gets  his  month's  salary.  Or,  if  he  is  in  the  custom  of 
charging  the  articles  to  himself,  he  takes  it  on  going  away 
at  night,  and  as  the  books  are  put  away  for  the  day  he 
will  charge  it  in  the  morning  ;  or  perhaps  he  has  already 
had  so  much  charged  against  him  for  the  current  month, 
that  at  the  end  of  it  there  will  only  be  enough  money 
coming  to  him  to  pay  his  board,  or  other  necessary  bills, 
and  so  he  will  remember  this  article,  and  charge  it  after 
the  pay-day,  as  against  his  next  month's  salary.  He  is 
satisfied  in  thinking  that  he  means  right,  but  he  easily 
forgets ;  or  if  conscience  reminds  him,  he  satisfies  that 
stern  monitor  that  he  intends  yet  to  pay — or  that  it  is 
only  a  trifling  matter  any  way,  and  even  if  he  should 
entirely  forget  it,  it  does  not  more  than  pay  him  for  some 
extra  work  he  is  required  to  do  in  his  daily  routine, 
and  which  he  would  not  otherwise  receive  compensation 
for.  But  time  passes,  and  the  article  is  neither  paid  for 
nor  charged.  The  next  time  he  needs  something,  and 
has  not  the  money,  it  is  easier  to  his  conscience.  He  can 
now  argue  the  matter.  He  gets  an  inadequate  salary. 
He  has  to  come  earlier  in  the  morning,  or  stay  later  in  the 
evening  than  another  one  who  is  getting  as  much  or 
more  salary,  and  this  which  he  now  takes  would  not  make 
up  for  the  difference  ;  though  he  means  to  pay  for  it,  any 
way — that  is,  he  means  to  pay  if  it  is  brought  to  his  notice 
by  his  employer  or  others  that  he  has  not  paid  for  it. 
And  so  he  goes  on  from  bad  to  worse,  till  his  stealings 

may  amount  to  hundreds  or  thousands.     It  is   very   rare 

21 


242 


The  Mnptqyer's  Guardian  Duty, 


that  an   employee,  when  thus  abstracting  his  employer's 
goods  or  money,  is  not  found  in  the   end  to  have  a 
careful  account  of  the  whole  amount  taken  ;  showing  by 
this   that  he  was  soothing  his  conscience  with  the  idea 
that  by  some  fortunate   event   which  he  hoped   would 
occur,  he  intended  to  pay  for  or  replace  all  he  had  taken. 
An" employer,  by  watchfuhiess,  and  a  systematic  regu- 
larity in  his  business,  can  do  much  to  guard  against  any 
of  his  employees  taking  this  first  step,  in  this  manner  at 
least.    He  ought  to  make  a  positive  and  absolute  rule 
that  no  one  of  his  employees  should  purchase  or  take  out 
of  the  store  any  article,  except  directly  from  himself.    -An 
account  of  all  such  purchases   should  be  kept,   whetlier 
made  for  cash  or  charged  against  salary,  so  that  he  could 
always  refer  to  it  and  know  with  certainty  when  he  sees 
anything  in  his  clerk's  possession,  which  has  been  a  part 
of  his  stock,  that  it  has  been  paid  for  or  charged,  when 
he  could  not  otherwise  distinctly  remember  the  circum- 
stance of  purchase.     In  such  cases  there  is  a  great  advan- 
tage in  having  the  employee  a  member  of  the  dealer's 
household.     The  manner  and  extent  of  his  expenditui-es 
can  be  more  readily  ascertained.     As  money  must  be  had 
before  it  can  be  expended,  the  employer  can  generally  tell 
whether  the  amount  his  employee  receives  in  wages  will 
cover  the  expenditure  which  he  must  necessarily  make ; 
and  if  he  concludes  that  it  does  not,  or  can  not,  he  should 
make   efforts   to   ascertain  how  the  balance  is  obtained. 
Something  may  be  surmised,  possibly,  by  the  habits  and 
character  of  the  clerk's  associates.    It  is  generally  not 
difficult  to  note  his  places  of  resort,  say  for  a  continuous 
week  or  two,  in  which  time  in  all  probability  some  clue 
will  be  found  to  any  seeming  mystery.   The  opportunities 
such  a  one  would  have  for  taking  goods  or  money  should 
also  be  especially  scrutinized,  also  the  opportunity  of  dis- 


Steallnff  for  Vicious  Indulgence, 


243 


posing  of  goods  surreptitiously  to  persons  who  may  visit 
the  place  of  business  as  customers.  Especially  being  on 
the  guard  when  people  of  suspicious  character  always 
want  to  trade  with  this  one  person. 

In  the  case  of  those  who  have  the  handling  of  money, 
it  may  be  necessary  when  such  are  suspected,  to  review 
the  system  on  which  the  business  is  done,  to  see  if  there 
are  proper  checks  and  safeguards  used  against  dishonesty  ; 
and  if  there  seems  to  be  loop-holes  in  the  system,  where 
money  could  be  abstracted  without  being  readily  noticed, 
or  be  covered  up  with  false  charges,  then  some  new  ar- 
rangements should  be  devised.  A  change  to  even  a  worse 
system  might  for  a  time  be  beneficial,  in  shutting  up  the 
opening ;  as  it  would  likely  take  some  time  to  find  out 
other  openings  for  peculation,  and  in  the  meantime, 
through  the  change,  circumstances  would  probably  occur 
which  would  satisfy  the  dealer  that  the  suspected  one 
either  was  or  was  not  guilty. 

When  goods  are  taken  to  dispose  of  for  money,  or  the 
money  itself  taken,  and  spent  in  haunts  of  dissipation  and 
in  vicious  indulgence,  the  transgressor  has  arrived  at  that 
hardened  stage  that  unless  very  youthful  indeed,  there 
can  be  but  little  hope  of  his  reformation.  He  can  only 
be  made  useful  as  a  warning  to  those  not  so  deeply  involved 
in  crime,  by  a  prompt  conviction  and  just  punishment. 

The  truest  mercy  to  such  is  that  which  gives  them  an 
opportunity  to  repent  behind  the  bars  of  a  prison  door, 
although  it  may  subsequently  expose  them  to  the  taunts 
of  their  associates.  In  other  lands  and  with  new  acquain- 
tances, they  would  afterward  have  a  better  chance  for 
reformation,  than  they  would  have  by  any  unkind  be- 
nevolence which  lets  them  off  without  punishment,  in- 
ducmg  them  to  regard  their  offence  as  but  a  trifling  one, 
to  be  repeated  the  first  favorable  opportunity. 


M 


V 


244         Losses  by  Over   If  eight  and  Measure, 

The  losses  which   occur  to  a  dealer  by  giving  over 
weight  or  over  measure  may  be  considerable  in  the  cours(3 
of  a  year.     It  is  a  subject  worthy  occaiional  attention, 
not  that  I   would   advise   dealers  to  be  too  scrupulous 
about  just  having  the  scales  always  evenly  balanced,  ex- 
cept when  they  are  weighing  medicines.     Good  weight 
and   good  measure   are  scriptural  injunctions,  but  they 
need  not  run  to  excess.    It  is  very  easy  to  lose  one  or  two 
per  cent  by  carelessness  in  this  respect,  and  when  it  is  re- 
membered that  this  loss  is  out  of  the  net  profits  of  the 
business,  which  in  many  cases  will  not  exceed  eight  or 
ten  per  cent,  it  can  be  readily  believed  that  the  net  profits 
may  fall  short  one-quarter  of  the  contemplated  result  from 
this  cause.    The  proportional  loss  is  still  greater  where 
the  gross  profits  are  small,  and  the  business  depends  for 
its  success  on  selling  a  great  quantity  of  goods.    Very 
often  this  over  weight  and  measure  results  from  th©  em- 
l^loyment  of  salesmen  who  have  never  been  taught  how 
to  weigh  or  measure  the  goods  they  sell,  and  a  few  lesi- 
sons  are  needed  to  perfect   them.     An   excellent   lesson 
for  such,  and  worth  trying  occasionally  by  those  more  ex- 
perienced, is  to  take  a  hundred  weight  of  some  easily  hand- 
led article  and  weigh  it  out  into  five  pound  quantities, 
or  even  less,  so  carefully  as  to  make  the  requisite  num- 
ber of  pounds.     Measured  goods  can  be  similarly  tested. 
One  who  has  never  tried  it  will  be  astonished  at  the  di- 
versity of  result  obtained  by  different  persons. 

Losses  sometimes  occur  this  way  through  purchasing 
goods  by  the  piece,  box  or  barrel,  as  of  a  certain  specific 
measure  or  weight— as  Chinese  silks,  raisins,  fish,  flour, 
etc.  These  are  purchased  as  containing  a  specific  number 
of  yards,  gallons  or  pounds,  but  many  times  fall  short  ol 
that ;  though  as  the  article  is  not  bought  by  the  measure 
but  by  the  piece  or  package  no  allowance  can  be  claimed. 


Omissions  to  Ch'hrge   Goods, 


245 


Where  such  goods  are  retailed  it  is  well  to  occasionally 
test  the  net  contents  of  a  piece  or  package,  so  that  the 
actual  cost  per  yard,  gallon  or  pound  may  be  seen.  In 
some  cases,  perhaps,  this  result  may  be  more  conveniently 
ascertained  by  keeping  a  memorandum  on  the  package  of* 
each  amount  weighed  out  as  sold,  until  the  whole  is  re- 
tailed. 

The  next  subject  in  this  connection  to  be  mentioned 
is  losses  by  omissions  to  charge  on  account  goods  that 
are  sold  on  credit.  In  some  stores  a  pass  book  is  given 
to  such  customers  as  desire  it,  on  which  the  goods  are  en- 
tered as  purchased,  as  well  as  in  the  books  of  the  dealer. 
If  the  experience  with  such  books  may  be  taken  as  a  cri- 
terion of  other  accounts,  almost  every  retailer  selling  on 
credit  will  lose  considerably  by  omissions  to  charge  the 
goods  when  delivered.  I  venture  to  assert  that,  in  fully 
one-half  the  cases  where  a  settlement  is  ma^e  of  a  three- 
months  account,  containing  the  record  of  twenty  to  thirty 
or  more  different  purchases,  some  will  be  found  on  the 
pass  book  which  are  not  entered  in  the  dealer's  books. 
And  in  instances  without  pass  books,  how  often  does  it 
occur  that  in  the  morning  something  is  recollected  which 
was  delivered  the  night  before,  without  being  charged, 
and  subsequently  forgotten  till  some  incident  brought  it 
to  mind.  In  view  of  such  instances,  how  many  must 
there  be  where  the  matter  is  entirely  forgotten  ? 

These  omissions  are  most  likely  to  occur  when  intimate 
customers  purchase.  The  dealer  and  his  clerks  are  all 
busy,  when  some  intimate  but  impatient  customer  comes 
in.  He  wants  a  hoe,  or  a  scythe,  or  a  shovel,  or  some 
such  article,  which  he  selects  and  carries  off,  telling  the 
dealer  to  charge  it  to  his  account. 

The  only  way  to  avoid  omissions  to  charge  such,  or  any 


24'J 


Losses  by  Hemnanis— 


goods,  is  to  trust  nothing  to  memory,  but  to  make  at  leasfc 
a  note  of  the  matter,  by  a  ticket  in  the  money  drawer,  or 
in  some  convenient  receptacle,  when  the  charge  cannot  be 
made  at  once.  But  preferably  make  the  charge  at  once, 
even  at  the  risk  of  losing  the  sale  to  the  other  customer 
who  is  being  served. 

Losses  which  occur  in  the  retail  dry  goods  trade  from 
imsa! cable  remnants  of  goods,  though  not  precisely  a  total 
loss,  as  the  foregoing,  may  be  appropriately  referred  to 
here.  "With  the  best  attention  to  the  subject,  on  the  part 
of  the  dealer,  there  will  always  be  losses  from  this  source  ; 
they  may  be  very  considerable  by  inattention,  and  much 
diminished  by  care  and  prudence. 

Attention  should  be  given  in  the  first  place  to  purchas- 
ing such  lengths  of  pieces,  especially  of  costly  goods,  aw 
will  cut  to  the  quantities  which  are  ordinarily  required, 
without  remnant.  And  in  the  second  place,  in  retailing  the 
goods,  the  quantity  which  may  be  advantageously  cut  off 
from  any  piece  should  be  considered  before  it  is  cut  off. 
And  even  calculated  so  long  beforehand  that  any  piece 
which  cannot  be  cut  to  suit  the  customer  who  is  then  pur- 
chasing without  bad  loss  by  remnant,  should  not  be  shown 
at  all,  at  least  not  until  every  other  effort  has  been  made 
to  suit  without  effect.  As  the  consequence  would  often  bo 
that  the  customer's  choice  would  fall  exclusively  on  the 
piece  which  the  dealer  could  not  afford  to  cut  in  the  length 
that  would  be  required. 

In  retailing  valuable  dress  goods  or  other  articles,  rem- 
nants of  which  cannot  be  readily  sold,  except  at  a  great 
sacrifice,  it  is  a  very  good  plan  to  mark  on  the  ticket  th(3 
length  which  may  be  cut  from  the  piece,  and  as  each 
prescribed  length  is  cut  off,  the  salesman  runs  a  pencil 
mark  through  so  much  of  the  memorandum ;  and  nevejc 


And  the  !Best  Means  to  Arold  Them, 


247 


allowing  other  lengths  to  be  cut — except  with  permission 
of  the  principal,  who  only  is  to  decide  whether  it  will 
be  advantageous  to  cut  the  goods  of  a  different  length  or 
not.  As,  for  instance,  a  piece  of  dress  goods  of  52|^ 
yards  might  be  marked  12,  13,  13 J,  14,  these  being  the 
ordinary  range  of  length  required  for  a  dress.  The  first 
purchaser  may  wish  12J  yards,  and  can  be  accommo- 
dated, slightly  altering  the  figures  for  what  is  left.  So 
probably  the  second  purchaser.  Any  change  for  the  third 
purchaser ,  requires  more   consideration. 

Observance  of  these  two  precautions  will  tend  to  lessen 
very  much  the  number  of  remnants  made  in  retailing,  but 
still  many  will  be  made,  and  some  special  efforts  are  re- 
quired to  sell  them  off  quickly,  as  they  are  not  only  un- 
profitable stock  of  themselves,  but  often  hinder  the  sale  of 
other  goods,  through  the  customer  fancying  a  remnant 
which  is  insufficient  in  quantity  for  her  wants,  and  will 
not  be  satisfied  with  any  other  style. 

Of  these  efforts,  the  first  is  a  prompt  reduction  in  the 
price.  Sometimes  such  a  reduction  will  induce  the  pur- 
chaser of  the  last  previously  sold  quantity  to  take  the 
portion  that  would  be  a  remnant ;  though  it  can  not  al- 
ways be  sold  in  this  way  without  a  too  great  and  unpro- 
fitable reduction.  But  when  a  remnant  is  about  being 
made  it  is  at  least  always  worth  an  earnest  trial.  The 
next  effort  will  be  to  keep  them  in  such  a  prominent  po- 
sition as  that  they  will  be  often  brought  to  the  notice  of 
the  customers  as  special  "  bargains."  Every  community 
has  its  "bargain"  hunters,  who  will  buy  articles  and 
find  use  for  them  afterwards.  Sometimes  such  remnants 
can  be  manufactured  into  something  more  saleable.  This, 
though,  requires  some  tact  and  experience,  and  does  not 
always  succeed. 

It  is  a  good  plan  to  ticket  the  length  on  each  piece,  and 


248 


Importance  of  this  Zieak, 


the  aggregate  price  in  round  numbers  of  the  whole  rem- 
nant— not  the  price  by  the  yard,  as  in  the  latter  case 
there  will  often  be  a  little  chaffering  about  throwing  off 
something  from  the  measure — calling  three  and  a  half 
yards  three  yards,  etc.,  taking  up  more  of  the  salesman's 
time  than  is  profitable. 

The  remnant  will  often  have  all  the  net  profit  of  the 
piece,  from  which  it  came,  lying  in  it,  and  the  dealer's  ag- 
gregate profits  of  the  year  may  depend  largely  upon  his 
skill  in  selling  them  off  advantageously.  They  should 
never  be  allowed  to  accumulate,  and  if  the  first  reduction 
in  price  does  not  bring  about  a  sale  after  a  reasonable 
trial,  the  price  ought  to  be  further  reduced. 


CHAPTER   XYII. 

KEEPING   ACCOUNTS. 

THE  principal  end  sought  to  be   ot>tained  in  keeping 
accounts  in  business,  is  to  know  thereby  how  much  each 
debtor  owes,  and  how  much  each  creditor  is  to  be  paid. 
If  the  dealer  has  no  knowledge  of  book-keeping  beyond 
this,  his  books  ought  to  stop  at  that  point  till  he  learns 
further.    There  is  no  greater  waste  of  time  and  money  m 
a  small  way,  than  that  where  a  dealer  employs  a  book- 
keeper or  clerk  to  keep  a  complication  of  accounts  m  his 
books  which  he  can  not  himself  understand.     The  keep- 
ing of  such  accounts  as  «  Cash,"   "Merchandise,"  "In- 
terest," "  Profit  and  Loss,"  etc.,   are  exceedingly  advanta- 
geous to  a  dealer,  if  he  learns  anything  from  them,  but  of 
themselves  they  add  nothing  to  the  profits  of  the  year's 
business.     And  yet  they  serve  a  good  and  useful  purpose, 
when  understood,  in,  to  some  extent,  proving  the  correct- 
ness of  the  other  accounts,  and  in   informing  the  dealer 
from  time  to  time,  as  he  consults  them,  of  the  progress  of 
his  business.     And  it  is  time  well  expended  for  a  man 
who  buys  and  sells  goods  to  any  extent,  to  thoroughly 
master  the  science,  so  that  he  can  understand  them. 

At  a  period  in  days  long  gone  by,  the  author  kept  a 
set  of  books  for  an  old  dry  goods  merchant  who  never 
understood  over  one-half  that  was  in  them.  All  that  he 
ever  looked  at  was  to  see  occasionally  exactly  what  some 
man  owed  him,  or  what  definite  amount  he  had  to  pay. 
The  "  fictitious"  accounts  were  all  Greek  to  him,  and  yet 
with  a  stub  of  a  pencil  and  a  few  smutty  papers  which  he 


'm 


250        The  Sook- keeping  most  to  he   ^Vef erred, 

carried  in  his  vest  pocket,  he  kept  such  an  account  that  he 
could  at  anv  time  tell  in  a  few  minutes  how  much  mer- 
chandise  or  cash  he  ought  to  have  on  hand,  what  had 
been  made  by  discounting  his  paper,  the  amount  of  cur- 
rent expenses,  etc.,  not,  of  course,  to  the  exact  cent,  but 
with  sufficient  accuracy  for  his  imnfiediate  purposes.  To 
him,  therefore,  his  method,  so  far  as  these  accounts  were 
concerned,  was  far  preferable  to  the  regular  and  more 
complicated  *'  double  entry "  books  which  were  kept  for 
him ;  as  by  his  system  he  controlled  his  purchases  from 
time  to  time,  to  the  amount  which  his  sales  required  and 
his  expected  receipts  of  cash  would  justify,  and  could 
readily  tell  when  he  had  money  in  excess  of  his  immedi- 
diate  prospective  payments,  and  the  indebtedness  of  fu- 
ture months  which  it  would  be  most  advantageous  to  an- 
ticipate, and  generally  was  enabled  to  so  conduct  and 
manage  his  business  that  he  made  money.  It  is  hardly 
necessary  to  say  that  he  ought  to  have  studied  the  science, 
and  made  himself  familiar  with  the  practice  in  the  regular 
manner,  as  his  business  would  afterward  have  been  more 
easily  and  readily  conducted.  But  until  he  had  so  learned 
it  his  system  was  preferable,  and  to  any  who  are  like  him 
ignorant  of  the  principles  of  "  double  entry  "  book-keep- 
ing I  commend,  as  preferable,  any  plan  which  they  do 
thoroughly  understand,  whether  it  be  notched  sticks, 
chalk  scores,  pencil  memorandums  or  "single  entry" 
books.  They  are  commended  as  preferable,  because  the 
very  essence  and  soul  of  the  work  is  its  comprehension. 

Ignorance  of  the  principles  and  practice  of  "double 
entry  "  book-keeping,  simple  though  they  are,  is  astonish- 
ingly universal.  A  lawyer  of  standing  in  New  York 
city,  extensively  engaged  in  the  trial  of  cases  as  "referee," 
where  books  of  account  were  often  introduced,  while  ad- 
mitting his  own  ignorance  of  book-keeping  to  the  author. 


General  Ignorance  concerning  the  Science.      251 

remarked  that  in  all  his  experience  in  the  many  suits  be- 
fore him,  he  had  never  met  with  a  lawyer  who  so  thoroughly 
understood  "double  entry "  book-keeping,  that  he  could 
elucidate  the  matters  at  issue  from  the  account  books  often 
introduced.  That  they  invariably  had  to  employ  a  book- 
keeper as  an  expert  to  develop  the  testimony  which  the 
account  books  contained.  A  retailer  that  prided  himself 
on  his  smartness  and  general  intelligence,  once  in  the  wri- 
ter's presence  showed  his  ledger  to  a  creditor,  as  an  ex- 
hibition of  his  systematic  manner  of  doing  business,  re- 
marking that  *'  in  this  new  ledger  he  was  keeping  his  ac- 
counts by  "  double  entry,"  while  the  only  difference  be- 
tween this  and  his  former  plan  of  "single  entry,"  was, 
that  the  ledger  was  ruled  with  "  debtor  "  and  "  creditor  " 
columns  on  one  page,  and  not  as  his  old  ledger  had  been, 
with  "  debtor  "  on  the  left  page  and  "  creditor  "  on  the  right. 

It  is,  too,  a  very  easy  thing  to  go  through  a  regular 
course  of  study  of  book-keeping,  and  learn  the  theory  and 
be  able  to  keep  a  set  of  books— that  is  to  enter  in  the 
proper  auxiliary  books  the  original  entries,  and  to  transfer 
these  under  proper  headings  into  the  journal  and  ledger, 
and  make  out  a  balance  sheet  showing  the  results  of 
a  year's  business,  without  having  that  intimate  knowledge 
of  the  principles  necessary  to  enable  one  to  make  that  use 
of  his  books  which  they  are  susceptible  of,  in  the  daily 
transactions  of  his  business. 

It  is  all  very  well  for  a  dealer  tJ  be  able  to  know,  at 
the  end  of  each  year,  or  half  year,  by  balancing  up  his 
books,  exactly  how  his  business  affairs  are ;  but  there  are 
events  occurring  to  a  man  in  active  business  every  month 
— often  every  week,  the  proper  management  of  which  re- 
quires that  he  should  be  able  readily  to  make  up  from 
his  books  the  result  in  whole,  or  in  part,  of  so  much  of 
the  year's  business  as  has  already  elapsed  since  the  last 
"  balance  sheet "  was  made. 


252     >^«'  '■'  *o  **  learned  from  the  Account  Sooks. 

The  difficulty  with  a  majority  of  those  knowing  a  little 
of  the  science,  who  would  learn  more  but  find  it  hard  of 
comprehension,  is  that  they  expect  too  much  from  it.  They 
iook  for  it  to  give  definite  results  in  each  account  at 
all  iunctures.  In  actual  business  this  is  not  possible  m 
some  of  the  principal  accounts,  except  when  specially  made 
UP  preparatory  to  balancing  the  books. 

The  ledger,  besides  telling  accurately  what  each  man 
owes,  or  is  to  get,  may  tell  definitely  how  much  ';  Cash 
there  is  on  hand,  and  what  amount  of  "  Bills  Eeceivable 
and  "Bills  Payable"  there  are;  but  it  cannot  tell  by  the 
"Expense"  account  definitely,  except  at  certain  times, 
what  the  expenses  of  the  business  have  been  from  any  given 
period  up  to  the  moment,  as  there  are  often  arrears  of  ex- 
penses unpaid,  and  accounts  running  against  employees 
or  others,  which  will  be  balanced  by  their  salary  at  a 
later  period,  and  all  be  passed  into  the  "Expense     ac|- 
count.    Neither  will  it  give  from  the  "Profit  and  Loss 
account  anv  indications  of  the  loss  or  gain,  for  the  profits 
are  rarely  ascertained  or  entered  till  stock-taking,  and  the 
losses  by  bad  debts  may  remain  uncertain  for  months,  and 
stand  charged  against  the  delinquent  debtor     Nor  can 
the  "Merchandise"  account  tell  what  is  on  hand,  as  the 
profits  on   the  sales  and  the    depreciation    on    unsale- 
able  portions  of  the  goods,  can  only  be  known  definite  y 
at  the  stock-taking.    Before  that,  and  m  the  mtermedme 
periods,  these  matters  have  to  be  estimated  from  a   ge:a- 
eral  knowledge  of  the  whole  business.    Hence  the  best 
book-keeping  in  any  ordinary  business  gives  in  manya^ 
counts-and  these  the  most  essential  often  m  controlling 
or  directing  the  management  of  the  business-only  in- 
complete  results.    And  what  is  reqmred  of  the  dealer,  is 
such  .ntimacy  with  the  books  and  their  pnnciples  in  con- 
nection with  the  business,  that  he  can  readily  make  up  at 


\M 


The  J^ undamental  "Rule  in  ^ook-keeping.      253 

any  time,  in  a  few  niomeuts,  the  re^^ults  on  any  special 
Item  or  account,  which,  in  view  of  some  meditated  trans- 
action  it  is  desirable  he  should  know. 

Too  often  the  business  of  those  who  even  understand 
reasonably  well  the  rules  and  practice  of  book-keepmg,  is 
like  a  prolonged  battle,  where  they  only  get  out  of  the 
smoke  and  confusion  once  in  six  months  or  a  year,  to  look 
over   and   marshall  their  forces,   count  their   dead   and 
wounded,  inspect  their  trophies  and  note  their  vantage 
ground,  if  they  have  gained  either ;  whereas  they  should 
be  so  situated  as  to  see  from  day  to  day,  if  necessary,  how 
the  battle  is  coing— when  it  is  desirable  to  recede,  when  to 
advance.     Otherwise  much  of  the  result  is  luck  and  chance, 
and  is  unfavorable,  which  under  wiser  generalship,  would 
have  been  turned  to  success,  as  the  issue  of  forethought 
and  calculation. 

In  keeping  accounts,  the  fundamental  rule  is  to  make 
every  entry  so  clear  in  all  its  parts,  and  so  full— givmg 
the  names  of  the  persons,  the  several  items,  and  all  the 
various  detaUs  in  the  original  entry,  and  the  proper  head- 
incrs   alphabetically   indexed,   with  full  reference  to  the 
pacre  of  the  original  entry,  when  transferred  to  the  led- 
ger, so  that  any  competent  book-keeper  can  readily  un- 
derstand the  transactions  recorded,  and  trace  them  through 
the   various  books  that  they  are  entered  in,  without  the 
necessity  of  explanation  from  the  person  making  the  en- 
tries.    And  the  neophyte  in  the  science  may,  with  advan- 
tage to  his  thorough  training,  keep  this  question  constantly 
in  mind,  as  he  pens  his  various  entries:  "  Are  they  so  full 
and  plain  that  a  competent  book-keeper  can  clearly  under- 
stand their  intention  and  scope  without  my  explanation  ? 

Correctness  in  keeping  accounts  is  a  matter  of  the  first 
importance,  and  is  only  attained  by  special  care  and  atten- 
tion, directed  to  that  end.    To  attain  this  correctness  it 

22 


254 


Importance  of  Correctness, 


f>etecting  Arithmetical  Errors. 


255 


is  essential  that  every  transaction  which  it  is  necessary  to 
keep  an  account  of,  should  be  entered  by  the  dealer  at 
once,  and  not  be  trusted  even  momentarily  to  the  mem- 
ory. The  entry  ought  to  be  regarded  as  a  part  of  the 
transaction,  and  by  no  means  the  last  part  of  it  either, 
as  is  too  often  the  case,  when  the  dealer's  attention  being 
drawn  to  other  matters,  there  is  always  danger  that  the 
proper  entry  will  be  forgotten.  As  an  illustration :  in  the 
taking  of  money  in  the  settlement  of  an  account,  the  first 
thing  done  after  the  money  is  received  and  counted,  should 
be  the  making  of  an  entry  in  the  book,  after  that  the  re- 
ceipt and  the  change,  if  any,  can  be  given ;  or  in  a  sale 
of  goods  on  credit,  the  entry  should  be  made  before  the 
goods  are  tied  up — and  by  all  means  before  delivery 
of  them  to  the  buyer.  Sometimes  it  will  occur  that  the 
goods  are  in  the  hands  of  the  buyer  before  it  is  known 
that  they  are  to  be  charged  to  account,  and  the  omissions 
to  charge  goods  sold  on  credit,  or  errors  in  the  charge 
are  most  likely  tc  occur  under  such  circumstances.  It  is 
therefore  a  good  plan  to  use  a  little  form  in  the  charging 
of  goods,  such  as  havmg  them  always  present  in  one  lo- 
cality while  the  ' '  entry  "  is  being  made,  so  that  they  may 
be  compared  with  it  afterward. 

When  this  custom  prevails,  an  enquiry  is  appropriate, 
prior  to  the  actual  delivery  of  the  goods  to  the  customers, 
who  are  likely  to  want  credit,  as  to  whether  they  wish 
the  goods  charged.  When  the  goods  have  been  actually 
delivered,  and  such  a  custom  is  known,  there  is  no  im- 
propriety in  the  dealer  again  taking  the  articles  in  his 
hand  or  possession,  to  carry  to  the  desk  or  locality  where 
the  entering  is  done,  so  that  the  charge  may  be  made  in 
a  regular  manner. 

The  only  good  that  is  to  be  found  in  many  of  the  forms, 
and  much  of  the  routine  in  more  important  affairs,  is  that 


a  habit  is  acquired  which  unconsciously  leads  to  the  per- 
formance of  a  duty  that  might  otherwise  be  forgotten. 

It  is  a  good  plan  to  have  contiguous  to  the  desk  where 
the  books  are  kept,  a  small  platform  or  counter,  separate 
and  marked  off  from  the  ordinary  sale  counter,  where 
goods  sold  on  credit  are  always  to  be  placed,  if  not  too 
bulky,  while  the  "  entry  "  is  being  made  ;  and  still  another 
location,  where  they  are  placed  afterward,  waiting  for  the 
customer  to  take  them,  or  their  being  sent  away,  buch 
separate  locations  need  not  take  up  much  room  wlien  the 
store-house  and  business  is  of  Umited  extent,  but  they 
are  valuable  adjuncts  in  the  plan  ^of  "a  place  for  every- 
thing,  and  everything  in  its  place.".  ^.  ,      , 

It  should  be  the  pride  of  every  dealer  to  have  his  books 
uniformly  correct,  and  he  ought  to  consider  himself  dis- 
graced  bv  every  error  brought  to  light  in  them;  and  if 
errors  and  omissions  are  frequent,  he  might  seriously 
question  his  ability  to  conduct  his  business.  Arithmetical 
errors,  and  errors  made  in  transferring  from  one  book  to 
another,  are  best  detected  by  a  careful  repetition  of  the 
calculations,  and  checking  off  of  the  items  transferred. 
Without  this  review  errors  will  be  frequent. 

The  omissions  to  charge  goods,  however,  can  not  be 
discovered  by  any  such  means,  tind  the  reader  is  referred 
to  the  latter  part  of  the  preceding  chapter,  where  this 
subject  was  treated  of  under  the  losses  of  the  busmess, 
for  other  plans  in  connection  with  those  above  mentioned, 
to  guard  against  this  neglect. 

Among  all  the  errors  and  omissions  of  retailers  in 
keeping  ^^accounts,  none  are  more  prevalent  than  those 
connected  with  the  account  of  their  own  indebtedness. 
It  would  be  difficult  for  many— perhaps  one-half  ot  all 
who  retail  goods— to  tell  at  any  definite  time  when  called 
on,  how  much  they  owe  their  creditors.    The  loose  habit 


256 


Omission  to  Credit  Goods, 


';;!l!: 


they  permit  with  the  invoices  of  goods  they  receive,  and 
generally  the  inattention  to  a  proper  system  of  receiving 
goods,  the  former  frequently  found  days  after  their  receipt 
filed  away  in  the  coat  pocket  of  the  principal,  or  his  clerk, 
or  carelessly  stuck  away  in  the  most  convenient  comer  or 
drawer;  and  the  latter  taken  in  and  placed  on  sale 
without  any,  or  but  a  cursory  examination  and  com- 
parison with  the  mvoices,  can  only  produce  uncertainty 
and  error  in  the  accounts  that  are  based  mainly  on  such 
memorandums. 

It  may  well  be  doubted  whether  one-half  of  the  "  false 
pretence"  cases,  where  retailers,  in  seeking  credit,  have 
made  statements  of  their  indebtedness,  subsequently  found 
to  be  erroneous,  have  not  their  origin  in  ignorance.  True, 
a  man  has  no  business  to  say  that  he  owes  only  a  certain 
sum,  unless  he  knows  surely  he  does  not  owe  more,  and  it 
may  be  legally  right  to  hold  him  to  the  statement  made  in 
ignorance,  just  the  same  as  if  made  in  wilfulness. 

The  omissions  to  credit  persons  for  goods  purchased  can 
generally  be  avoided  by  the  adoption  of  proper  arrange- 
ments and  plans  in  the  receipt  of  goods  and  invoices. 

When  the  character  of  the  goods  dealt  in  will  admit  oi 
it,  there  should  always  be  a  special  place  of  deposit  for  ar- 
ticles coming  into  the  store,  where  they  may  remain  until 
refnilarly  examined  and  compared  with  the  invoice. 

The  invoices  received  with  them  ought  to  be  first  exam- 
ined by  the  buyer  of  the  goods,  to  see  if  the  prices  are  cor- 
rect, and  the  quantities  charged  the  same  as  were  bought, 
and  if  found  correct,  his  initial  should  indicate  it.  Errors, 
if  any,  should  be  noted  on  the  mvoice,  which  ought  then 
to  be  entered  in  an  invoice  book ;  an  essential  book  in  the 
simplest  form  of  book-keeping  and  in  every  business.  li- 
the items  are  many,  it  will  sometimes  cause  too  much  de- 
lay to  copy  them  all  in  the  book  at  the  time,  and  tempo- 


The  Invoice-its  dispositions. 


257 


rarily  it  is  sufficient  to  simply  write  the  creditor's  name  in 
"Xoice  book,  under  its  proper  date  -d  pla^^^^^^^ 
count  off  the  number  of  lines  or  space  the  items  will  oc 
Zv^d  enter  the  gross  amount  of  the  mvoice  at  the 
Sroftlese  reserved  hues;  marking  at  the  same  time 
the  Wee  uniformly  in  one  place  with  the  page  .A^^ 
.oice  book  on  which  this  enixy  is  made.  JJ^™  ^ 
then  ready  to  be  used  for  the  examination  of  the  goods. 

In  hous'es  where  a  veiT  large  business  IS  caxned  on    he 
invoice  is  never  suffered  to  go  out  from  the  control  of  the 
rrson  whose  duty  it  is  to  enter  it,  all  examinations  of 
S  biS  made  by  the  use  of  iHe  copy  in  the  invoice 
Took     Thfs  plan  is  an  excellent  one,  where  enoi^l^  c^rks 
a^e  kept  to  have  the  invoices  at  once  copied  mto  the  m- 
"o^ce  book  or  where,  as  in  importmg  goods,  the  mvo..  ^ 
Teled  generally  several  days  before  the  goods  are  m 
Bit  in  ordinary  business  the  examma^-  of  good, 
with  the  original  invoice  directly  in  ^-^^^^ ^^^^^^^^^^^ 
more  expeditious  and  convenient  and,  by  this  plan,  fully  as 
Cfrom  the  danger  of  omissions  to  credit  the  purchase  as 
The  Tber     Even  if  there  is  a  delay  in  getting  back    he 
i^vo  ce  fr^^^^^       whose  duty  it  may  be  to  e™e  the 

penoa  possiui«  whatever  errors  or  deficien- 

exactly  copying  the  invoice.    Whatever  err 
Pipq  were  found  in  the  goods  ought  to  have  Deen  nu 
cies  were  louuu  x  •  ^  „f  fv,p  tirne  of  examination, 

voice  returned  for  correction.     Space  snou.a  i 

I^  between  the  different  entries  of  invoices  for  the 
,^sevved  between  toe  ^,d„,tions  or  corrections  as 

iXn  X:ia  or  settle  upon  after  communication 


258    Account  of  Goods  'Received   yVUhoiii  Invoice, 

with  the  party  from  whom  the  goods  were  purchased* 
The  invoice  book  should  have  the  page  wide  enough  to 
admit  of  an  extra  money  column  on  the  extreme  right, 
into  which  nothing  else  is  inserted  but  the  full  amount 
of  the  fooiinscs  after  all  deductions  and  corrections 
are  made,  and  care  should  be  taken  that  this  full 
amount  is  not  entered  in  the  outer  column  until  the  in- 
voice and  goods  are  examined,  and  corrected  if  found  in- 
correct. The  presence  then  of  the  total  footing  in  this 
outer  column  will  indicate  that  the  entry  is  ready  to  be 
posted.  Without  this  or  some  other  check,  there  is  dan- 
ger that  the  entry  will  be  posted  to  the  credit  of  the  sel- 
ler before  due  corrections  are  made.  Where  there  is  some 
delay  in  the  correction  of  the  invoice,  as  is  often  the  case, 
it  is  best  to  post  the  entry  into  the  ledger  to  the  proper 
credit,  leaving  the  amount  blank,  to  be  subsequently  in- 
serted when  the  invoice  is  received.  Unless  this  is  done, 
there  is  a  further  danger  that  this  invoice  will  be  passed 
over,  and  other  invoices  of  a  later  date  from  the  same  house 
posted  in  the  ledger,  throwing  this  entry  out  of  proper 
place,  if  no  more  serious  omission  happens.  (See  Appen- 
dix for  specimen  of  invoice  entered  and  marked  for  cor- 
rection in  this  manner.)  When  invoices  are  kept  by  pasting 
them  in  a  book,  as  is  sometimes  done,  the  place  for  them 
in  the  book  should  be  marked  out — the  name,  date  and 
amount  inserted,  as  directed  for  the  skeleton  entry  in  the 
invoice  book,  and  after  correction,  they  are  to  be  pasted 
in  the  place  so  reserved. 

It  will  sometimes  occur  that  goods  are  received  with- 
out an  invoice.  The  regular  course  would  be  to  leave 
them  in  the  ordinary  receptacle  or  place  for  depositing 
goods  coming  in,  until  the  invoice  arrives.  It  often  hap- 
pens, though,  that  the  goods  are  in  immediate  demand, 
and  the  delay  in  receiving  the  invoice  will  cause  a  loss  of 


•      Crediting  Customers  for  family  Supplies,    259 

sales.    If  it  is  thought  so,  and  the  buyer  definitely  recol- 
lects the  details  of  price  and  quantity,  a  memorandum 
can  be  made  of  them,  which  may  take  the  form  of  the 
regular  invoice,  and  be  entered  in  skeleton  form  m   he 
same  manner  as  the  original  would  have  been  to  be  filled 
out  from  the  genuine  invoice  when  received.    Greater 
care  should  be  taken  in  the  examination  of  such  goods, 
and  after  one  person  has  made  out  a  memorandum  from 
his  own  examination,  another  should  take  the  memoran- 
dum and  re-examine  the  goods  as  from  the  gf  "^-^  i"- 
voice.    Then,  when  that  invoice  is  received,  it  it  differs 
from  the  memorandum,  satisfactory  evidence  is  at  hand  of 
the  true  quantity,  even  though  a  part  or  all  of  the  goods 

have  been  sold.  . 

When  two  or  more  persons  are  engaged  m  the  exami- 
nation of  the  goods  of  one  invoice,  it  is  a  good  plan  for  each 
to  place  his  initials  on  the  line  of  the  items  exammed  by 
him.  If  subsequently  any  errors  are  found,  he  alone  should 
bear  the  blame  who  is  in  fault. 

Another  frequent  omission  in  keeping  accounts,  is  that 
of  the  comparatively  minor  credits,  which  are  to  be  ap- 
plied in  reduction  of  some  of  the  customer's  debts,  for  ar- 
ticles furnished  by  them  to  the  dealer  for  his  private  ex- 
penses as  the  bills  of  the  butcher,  baker,  shoemaker,  phy- 
sician,'etc.    It  mav  not  be  always  possible  to  get  the  de- 
tails of  these  matters,  but  whenever  the   amounts  are 
known  they  should  be  credited  and  duly  charged  to  the 
private  account  of  the  debtor,  and  when  they  cannot  be 
definitely  known  without  great  trouble,  settlements  should 
be  insisted  on  monthly  or  quarterly  at  furthest,  even 
thonch  the  balance  found  due  on  either  side  is  not  paid. 
Long-running,  unsettled  accounts  of  this  kind  are  almost 
certain  in  the  end  to  prove  the  destruction  of  friendship 
between  the  parties.    One  or  the  other  is  likely  to  be 


260 


The  deceived  IRetailer. 


surprised  at  the  magnitude  of  the  account  against  him, 
an-d  the  expression  of  his  doubts  of  its  correctness,  often 
leads  to  hard  feeling  before  the  accounts  are  settled. 

A  retailer  who  was  in  arrears  of  his  payments,  and 
whom  I  was  advising  about  the  course  he  should  adopt  m 
view  of  such  arrears,  had  accounts  of  this  character  on 
his  books,  which  had  been  running  two  and  three  years 
without  settlement,  or  the  entering  of  any  credit  for  the 
articles  furnished  him,  some  of  the  accounts  amounting 
to  two  and  three  hundred  dollars.    He  seemed  to  have, 
and  thought  he  had  a  good  deal  trusted  on  his  books, 
which,  he  said,  if  he  could  only  collect  he  would  be  able 
to  pay  up  all  his  arrears   of  indebtedness.    I  was   his 
creditor  for  several  hundred  dollars,  and  was  anxious  to 
get  some  of  these  outstanding  accounts  transferred  toime, 
which  I  could  place  in  a  collector's  hands  to  secure  my 
claims  against  him,  and  which  he  was  willing  to  give. 
But  as  I  turned  over  leaf  after  leaf  of  his  ledger  refer- 
ring  to  one  large  account  after  another,  and  was  informed 
that  this  was  due  from  a  blacksmith  who  had  an  account 
against  him  of  about  an  equal  amount,  the  next  from  a 
farmer  who  had  furnished  hay  and  feed  for  his  horse,  an- 
other from  a  physician  who  practiced  in  his  family,  and 
BO  on  through  a  long  catalogue,  really  embracing  all  the 
large  accounts,  and  suflEicient  to  have  covered  his  family 
expenses  for  two  or  three  years,  I  found  that  there  was 
really  not  one-half  of  the  amount  due  him  which  appeared 
on  his  books,  and  was  fain  to  put  up  with  a  larger  number 

of  small  accounts.  ,  . 

When  a  dealer  keeps  such  accounts  runnmg  on  his 
books,  without  the  credits  being  entered  that  should  be, 
he  soon  gets  an  unreliable  record.  He  is  misled  on  one 
side  by  the  appearance  of  money  due  him,  and  on  the 
other  by  his  private  expenses  seeming  to  be  less  than  they 


JR^eeping  account  0/  Cash  Sates,  261 

really  are,  and  is  therefore  deceived  on  both  sides,  and  is 
likeiy  to  soon  come  to  insolvency  in  his  business. 

A  dealer  deceives  himself  somewhat  in  the  same  man- 
ner  when  he  continues  to  keep  on  his  ledger  claims  against 
persons  which  he  is  unable  to  collect.    All  such  accounts 
should  be  promptly  turned  over  to  the  «  profit  and  loss 
account.    This  need  not  hinder  the  keeping  of  a  memo- 
randum of  them  in  another  book  as  a  list  of  bad  accounts, 
which  he  may  occasionally  look  over,  to  see  if  somethmg 
can  be  realized  from  them.    But  so  long  as  they  stand  m 
his  ledger,  apparently  as  good  accounts,  their  tendency  is 
to  deceive  him.     In  any  summing  up  of  the  outstanding 
debt,  they  swell  the  aggregate,  and  sufficient  deduction 
is  rarely  made  for  them.     A  man  may  be  only  a  k^^v® 
when  he  deceives  others,  but  when  he  deceives  himselt 
he  is  likely  to  be  both  a  knave  and  a  fool. 

The  practice  of  keeping  an  account  of  the  details  ot 
cash  sales,  is  one  at  present  mostly  confined  to  such  houses 
as  do  so  large  a  business  that  they  require  a  person  solely 
to  take  the  cash-the  cashier,  as  he  is  called-and  it  is 
mainly  as  a  check  on  the  cashier  that  these  details  are 
kept     But  the  custom  or  plan  is  being  introduced  among 
dealers  of  even  a  limited  business,  with  great  advantage. 
There  are  many  good  reasons  why  such  an  account  should 
be  kept  by  a  retailer,  who  needs  no  clerk  to  assist  him  m 
selling  his  goods,  though  it  is  more  necessary  and  advan- 
tageous  with  each  addition  to  the  clerical  force.  ^ 

The  most  convenient  form  for  keeping  such  details  m 
small  concerns,  is  that  of  making  a  pencil  memorandum 
on  a  ticket  at  the  time  of  the  sale,  and  placmg  it  on  a 
file  when  the  money  is  put  in  the  drawer. 

As  a  check  on  the  money  taker,  it  is  sufficient  simply 
to  name  the  aggregate  amount  of  each  ^f^^  but  it  is 
susceptible  of  a  larger  use  than  this.     It  takes  but  little 


n 


262 


The  *' Ticker*  ^an— 


more  time  to  give  enough  of  the  details  of  the  sale  in  an 
abbreviated  form,  to  be  very  useful  in  many  ways  to  the 
dealer.  It  enables  the  cashier  or  money-taker  to  go  over 
the  calculations,  and  correct  errors ;  it  often  prevents  dis- 
putes with  the  customer,  who'  may  come  back  in  a  day 
or  two,  forgetting  perhaps  some  article  purchased,  and 
claiming  that  there  was  a  mistake ;  it  is  often  useful  to 
the  dealer  in  enabling  him  to  trace  out  some  article  of  his 
stock  which  he  fears  has  been  stolen  ;  it  enables  him  to 
count  up  the  gross  profits  every  day  if  he  will,  or  as  often 
as  he  desires,  and  thus  to  know  whether  he  is  doing  a 
profitable  or  losing  business;  and  it  may  be  useful  as  a 
check  to  prevent  fraud  by  the  salesman  in  giving  goods 
to  a  confederate  at  much  less  than  their  value. 

The  only  current  objection  to  these  details  is,  that  they 
take  up  too  much  time.    It  will  be  found,  though,  after 
a  week's  practice,  to  add  very  little  to  the  work  of  the 
salesman,  who  is  always  under  the  necessity  of  counting 
up  the  total  amount  of  the  articles  sold,  which  should 
never  be  done  even  in  the  most  limited  extent,  except  by 
arithmetical  operation  with  a   pencil  or  pen — as  the  cus- 
tom of  reckoning  mentally,  the  sum  of  two  items  even, 
is   open  to   grave   objections.     When   permitted  with  a 
few  articles,  it  will  be  used  with  many,  and  the  correct- 
ness of  such  calculations  can  not  readily  be  verified.    If, 
therefore,  the  rule  is  adopted,  that  the  salesman  shall  use 
a  pencil  in  counting  up  the  sum  of  the  sale,  and  he  has 
blank  paper  conveniently  prepared,  the  extra  time  taken 
in  writing  down  the  number,  quantity,  name  and  price 
of  each  item  will  be  hardly  perceptible  in  the  most  hur- 
ried business.    The  blank  paper  for  such  tickets  costs  but 
little  in  money  or  time  for  preparation  ;  it  should  be  cut 
to  twaor  three  sizes,  as  experience  may  show  to  be  most 
desirable,  and  placed  at  various  localities  around  the  coun- 


Its  Advantage  and  Management,  263 

ters,  so  as  to  be  conveniently  within  reach  from  any  point 
where  the  salesman  may  be  engaged. 

The  initials  or  some  particular  number  to  designate  the 
salesman,  the  day  of  the  month  and  the  customer's  name, 
if  known,  should  also  be  written  on  the  ticket,  and  to 
prevent  confusion  on  a  small  ticket,  may  all  be  placed  on 
the  back.     (See  Appendix  for  a  form.) 

A  ticket  system,  by  which  it  is  known  exactly  how 
much  each  salesman  sells  each  day,  soon  begets  a  spirit  of 
emulation  among  the  clerks,  each  one  being  desirous  of 
surpassing  his  fellows  in  the  amount  of  his  sales ;  and  its 
adoption  will  be  often  found  to  create  new  life  and  activity 
in  a  business  where  all  was  before  listlessness  and  mac- 

tivity.  .  . 

These  tickets  should,  after  careful  revision,  be  strung 
on  a  twine,  as  nearlv  in  the  order  they  were  taken  m  as 
possible.  Each  day's  number  may  be  separated  from  the 
preceding  by  a  piece  of  stout  card,  and  if  the  card  be 
dated,  a  ready  reference  can  be  made  to  each  day's  tickets 

when  wanted.  •      i  • 

The  cash  account  should  always  be  made  up  in  the  even- 
inff  of  the  day,  after  the  sales  are  over,  when  the  money 
taken  in  is  put  away  for  safe  keeping,  and  by  all  means 
ought  to  be  done  before  the  business  of  the  next  day 
commences.    The  calculations  on  the  tickets  should  be 
crone  over,  if  not  done  as  taken  in,  and  the  gross  amount 
entered  in  a  cash  sales  book,  in  such  a  manner  as  to  show 
each   salesman's  sales,  and  the  aggregate  of  the  whole 
day's  transactions  for  cash  down  ;  which  carried  on  from 
day  to  day  will  give  the  aggregate  for  each  month  or  for 
th-  year  if  desired,  and  will  also  form  convenient  records 
tor  comparison  of  the  business  in  succeeding  years  at  the 
same  period.     (See  Appendix  for  form  of  this  Cash  Sales 
Book.) 


m 


2C4 


Tostinf;  the  Accounts  iDaUy. 


Attention  to  writing  up  the  account  books  every  clay, 
besides  the  advantage  of  always  having  everthing  m 
order  for  immediate  reference  thereto,  makes  the  duty  .i 
comparatively  light  one.  Twenty  to  thirty  minutes  will 
then  in  ordinary  cases  of  moderate  business,  suffice  to  ar- 
range all  the  work  of  this  kind ;  whereas  if  left  over  for 
a  week  or  two,  or  even  longer,  as  is  too  often  done,  it  be- 
comes a  tedious  and  disagreeable  work,  occupying  per- 
haps half  a  day  to  the  detriment  of  the  business  of  sell- 
ing durmg  the  half  day,  and  the  further  disadvantage  of 
having  the  accounts  meanwhile  in  such  shape  that  it  is 
quite  a  labor  to  find  out  if  occasion  requires  what  a  cus- 
tomer owes. 

I  have  seen  in  my  experience,  a  retailer's  books  a  whole 
year  in  arrears  of  posting.  The  man  thought  himself  worth 
Bome  five  or  six  thousand  dollars,  but  failed  six  months 
afterward,  and  could  not  pay  twenty-five  cents  on  the 
dollar  of  his  indebtedness.  It  was  very  "  hard  times" 
all  the  time  in  his  neighborhood. 

In  the  chapter  on  giving  credit,  mention  is  made  of  the 
advantage  to  be  derived  from  having  a  definite  period 
agreed  on  at  the  time  of  sale,  for  the  length  of  credit,  so 
that  there  will  be  no  misunderstanding  as  to  when  the 
debt  is  due,  and  it  ought  to  be  a  part  of  the  book-keep- 
ing to  take  note  of  this  maturity  of  the  credit.  It  should 
not  only  be  noted  in  the  sales  book  at  the  time  of  and 
with  the  original  entry,  but  should  be  transferred  in  post- 
ing to  the  ledger,  so  that  the  maturity  of  the  account 
can  be  seen  as  readily  as  the  amount  of  it.  And  bo  that 
collection  can  promptly  be  made,  or  at  least  attempted, 
when  the  account  becomes  due. 

When  the  accounts  are  very  numerous,  it  will  be  found 
very  convenient  to  have  a  memorandum  book  ot  "ac" 
cou!its  receivable,"  and  even  when  they  are  not  many,  if 


Memorandum  of '  Accounts  HeceivahteJ*        265 

it  is  customary  to  sell  bills  of  goods  on  differing  times  of 
credit,  it  is  desirable  to  have  a  book  of  the  kind,  so  that 
the  dealer  may  readily  see  how  much  will  be  due  hira 
from  outstanding  accounts  in  any  particular  month  in  a 
series  of  months ;  upon  which,  in  part,  he  must  often  base 
his  calculations  for  paying  his  own  indebtedness,  or  such 
as  he   may  need  to  create.     Such   a  memorandum   can 
readily  be  made,  if  a  regular  book  is  not  kept  for  the 
purpose,  by  taking  a  ledger  index,  such  as  comes  bound 
separatelv  from  the  ledger,  lettered  on  the  margin  one 
letter  to'  each  leaf,  and  ruling  it  with  money  and  date 
,  columns,  one  set  for  each  month,  leaving  a  wide  space  on 
the  extreme  left  for  the  customers'  names.     (See  Appen- 
dix for  a  form  of  one.) 

The  entries  in  such  an  account  should  be  made  at  the 
end  of  each  month,  by  going  regularly  over  the  ledger  and 
transferring  the  accounts,  as  posted,  into  the  column  of 
the  month  they  fall  due,  with  the  day  of  the  month  in 
which  they  mature,  or  the  average  date  if  there  is  more 
than  one  charge.     At  the  same  time  such  previous  ac- 
counts as  have  been  paid  during  the  month  may  be  marked 
off,  by  simply  drawing  a  line  through  the  figures.    If  the 
width  of  the  paper  admits  of  it,  a  marginal  space  on  the 
right  can  be  reserved  for  noting  down  any  matter  of  in- 
terest connected  with  the  account,  such  as  payments  in 
part,  or  promises  to  pay  at  some  special  day.    As  such 
a  book  would  be  really  only  a  memorandum  book,  the 
monthly  footings  and  the  marginal  notes  should  be  made 
in  pencil,  so  that  they  can  be  altered  from  time  to  time 
as  circumstances  require. 

It  often  occurs  that  customers  ask  for  credit  on  goods 

as  a  temporary  matter,  being  willing  to  pay  in  a  month 

or  so,  and  do  not  care  to  ask  for  the  formal  credit  of  a 

specified  time.     The  dealer  has  a  difficulty  in  deciding 

^  23 


%. 


V 


266 


The  Maturity  of  an  Indefinite  Credit, 


Importance  of  the  ^'Inventory,'' 


267 


when  the  account  may  be  considered  as  due  without  of- 
fence to  the  debtor.  The  debtor  waits  for  the  account- to 
be  sent  in,  while  the  dealer  is  fearful  of  sending  it  lest  it 
might  displease  him,  and  thus  the  credit  runs  on  much 
longer  than  was  expected  by  either  party  when  the  debt 
was  created.  To  meet  such  cases,  it  is  a  good  plan  for 
the  dealer  to  post  up  in  some  conspicuous  place  over 
his  desk,  where  all  his  customers  may  see  it,  a  neatly  writ- 
ten or  printed  card,  to  the  effect  that  "  All  goods  sold  on 
credit^  on  which  no  specified  time  is  given,  must  be  paid 
for  within  three  months,^''  or  such  shorter  or  longer  time 
as  may  be  proper.  Or  the  maturity  may  be  at  the  *'  quarters 
days,"  and  should  ordinarily  be  a  shorter  time  than  goods 
are  sold  on  when  credit  is  regularly  given. 

A  summary  of  the  daily  cash  and  credit  sales,  summed 
up  monthly  throughout  the  year,  in  schedule  form,  is  a 
convenient  memorandum  to  keep  for  showing  from  time 
to  time  the  progress  of  the  business.  The  precise  form 
of  such  a  memorandum  is  a  matter  of  indifference,  so  that 
it  brings  before  the  eye  at  once  a  compendium  of  the 
daily  sales.  (See  Appendix  for  a  form  of  such  a  sum- 
mary.) As  a  single  broad  sheet  is  sufficient  for  a  year, 
it  might  with  propriety  find  a  place  in  the  book  of 
"  accounts  receivable  "  before  mentioned,  together  with 
any  other  similar  memorandum  of  sales,  debts  or  pur- 
chases. To  any  one  unaccustomed  to  keeping  such  ac- 
counts, the  labor  required  will  no  doubt  appear  in  some 
respects  to  be  a  waste  of  time,  as  it  will  seem  probable 
that  the  information  wanted  of  these  matters  at  any  par- 
ticular juncture  could  be  hunted  up  for  the  occasion  at 
less  time  and  labor.  But  it  is  not  so,  if  care  is  taken 
not  to  descend  into  too  great  minutiae,  which  are  unneces- 
sary, and  only  those  more  important  matters  are  recorded 
which  every  dealer  who   properly  manages  his  business, 


always  needs  to  know,  it  will  be  found  that  the  informa- 
tion is  obtained  in  this  way  with  half  the  labor.  It  is 
true  that  it  is  more  labor  to  keep  reckonings  of  this  kind, 
to  guide  the  way  along,  than  it  is  to  dash  ignorantly 
through  in  the  dark,  which  the  dealer  generally  does  if 
such  accounts  are  not  regularly  kept.  It  soon  becomes 
too  much  trouble  to  sift  out  and  sum  up  the  results  he 
wishes  to  ascertain  on  any  special  occasion,  and  he  there- 
fore omits  it,  risking  the  action  contemplated  on  the  hope 
that  the  facts  are  such  as  he  would  have  them ;  when  a 
regularly  kept  memorandum  or  account  would  show  him 
definitely  how  matters  stand,  and  whether  there  is  really 
any  ground  for  his  conclusions. 

A  couple  of  hours  at  the  close  of  each  month,  will  or- 
dinarily suffice  for  making  up  these  memorandums,  and 
even  if  it  should  take  twice  as  long,  the  time  will  be  better 
spent  than  it  often  is  in  holding  political  or  other  disputa- 
tions with  customers  and  loungers. 

At  the  close  of  the  current  year,  it  is  very  essential 
that  the  books  should  be  balanced  up  and  an  inventory 
taken  of  the  goods  on  hand,  so  that  it  may  be  known  ex- 
actly what  progress  has  been  made  during  the  year.  Even 
this  inventory  is  very  frequently  omitted  in  the  retail  trade. 
« It  is  too  much  trouble  "— "  I  can't  spare  the  time  "— "  It 
will  not  make  the  goods  any  more  if  I  do  take  an  inven- 
tory." These  are  the  common  excuses  for  not  doing  the 
work,  and  possibly  to  the  most  of  those  who  thus  excuse 
the  omission,  it  would  be  a  superfluous  work,  as  they 
would  learn  nothing  by  it.  It  would  possibly,  in  their  case^ 
lonly  serve  to  gratify  a  childish  curiosity  to  know  just  how 
many  dollars  worth  of  goods  they  have,  and  for  that  pur- 
pose is  as  well  omitted. 

But  when  it  is  made  a  part  of  the  work  for  ascertain- 
ing the  profitableness  of  the  business  for  the  year,  and  is 


'■ti 


268  Marking  Down  Vmaleable  Goods. 

also  treasured  up  for  use  in  future  years  in  the  calculation 
of  the  comparative  profits  of  different  years,  and  thus 
serve  as  a  guide  to  direct  the  onward  course,  it  is  ot  pri- 
mary importance. 

It  is  impossible  for  a  reUiler' to  know  with  any  cer- 
tainty, at  the  close  of  the  year,  whether  he  has  made 
money  or  not,  unless  such  an  account  is  taken. 

It  is  not  only  in  this  view,  however,  that  the  takmg  of 
an  inventory  is  commended.     Being  a  regular  and  meth- 
odical  inspection  of  the  stock  of  goods,  it  should  always 
be  availed  of  to  especially  note  all  goods  which  are  re- 
maining too  long  on  hand,  and  to  ascertain  the  cause  for 
such  detention,  and  the  best  method  to  dispose  of  them. 
And  it  should  therefore  never  be  left  entirely  to  the  sub- 
ordinates or  clerks,  whose  chief  aim  would  naturally  be 
simply  to  take  a  correct  account  of  the  quantities  and 
cost  of  the  goods,  while  it  is  really  the  value  of  the  goods 
that  is  wanted.    This  value  can  be  given  properly  only 
by  the  proprietor  after  a  critical  examination  of  each  ar- 
ticle, and  a  comparison,  if  necessary,  with  other  goods  of 
similar  use  and  purpose  which  are  saleable.    There  is  no 
time  so   appropriate  for  a  general  overhauling  of   old 
goods,  and  marking  down  such  as  seem  to  require  it,  as  at 

the  inventorying. 

It  is  also  well  at  this  time  to  reconsider  the  arrange- 
ment or  location  of  the  goods  on  sale;  to  bring  more 
prominent  such  as  have  been  less  freely  sold  by  reason  of 
their  secluded  position,  and  generally  to  review  the  whole 
plan  and  arrangement  for  the  exhibition  and  sale  of  the 

goods.  , 

The   omission  to  take   the  inventory,  or  even  undue 

haste  in  running  through  it,  will  often  prove  to  be  the 

omission  of  all  this  useful  work. 

With  the  inventory  correctly  made  out,  and  showmg 


Items  Useful  to  Record  for  Reference.         269 

the  real  value  of  the  goods,  there  is  no  difficulty  under 
any  system  of  book-keeping  which  is  correct  and  com- 
plete,  of  making  up  a  "balance  sheet"  or  schedule  of  the 
assets  and  liabilities  of  the  dealer,  which  on  bemg  com- 
pared  with  that  of  previous  years  will  show  him  the  m-, 
crease  or  decrease  of  his  capital.  This  ought  to  be  care- 
fully and  accurately  made  up  and  preserved  from  year  to 
year,  that  it  may  be  used  as  occasion  requires  as  data  to 
guide  or  direct  future  business. 

For  these  purposes  the  "  balance  sheet,"  as  usually  made 
out  to  show  the  capital  by  a  comparison  of  the  "assets" 
with  the  "  liabilities,"  and  through  this  the  net  profit  or 
loss  of  the  year's  operations,  is  quite  inadequate ;  as  it 
does  not  give  all  the  details  which  are  necessary  to  enable 
the  dealer  to  avoid  the  errors  of  the  past,  or  guide  the  future 
course.  There  are  several  other  matters,  which  may  well 
be  incorporated  into  the  "  balance  sheet,"  that  are  to  be 
considered  and  properly  adjusted  to  and  with  each  other 
before  this  calculation  for  the  future,  or  comparison  with 
the  past,  can  safely  be  made. 

These  items  are  "  the  amount  of  sales  for  cash  "  and 
"  the  amount  of  sales  on  credit;"  "  the  gross  profits  on  the 
sales,"   "the   store   expenses,"   "the  private   expenses," 
*'  the'  losses   by   bad   debts  actually  incurred  during  the 
year,"  "  the  amount  estimated  for  losses  on  outstanding 
accounts,"  and  "  the  gain  or  loss  by  interest  and  discount." 
The  profits  of  a  year's  business  may  be  due  to  a  favorable 
interest  account ;  which  is  favorable,  because  a  larger  pro- 
portion of  cash  sales  enabled  the  dealer  to  discount  his 
bills  more  freely :  or  a  disastrous  year  may  have  been 
caused  by  heavy  losses  from  bad  debts  ;  resulting  either 
from  too  great  a  proportion  of  credit  sales,  or  from  out- 
standing debts  of  a  previous  year  on  which  too  low  an 
estimate  for  loss  was  made  at  the  close  of  the  year. 


','<■ 


270 


TAe  Bnd  and  ^im  of  Sook-keeping. 


The  dealer,  who  would  obtain  the  full  benefit  of  hia 
experience,  must  look  into  the  causes  for  the  profits  or  loss 
of  a  past  year's  business  ;  unless  he  does,  he  has  no  safe 
guide  in  his  experience.  And  when  the  schedule  of  th^ 
year's  business  shows  all  these  items,  in  connection  will' 
what  is  ordinarily  in  the  balance  sheet,  the  cause  for  any 
deficiency  or  any  unusual  prosperity  can  be  readily  seen. 

In  conclusion  of  this  subject,  my  readers  are  cautioned 
against  the  too  current  opinion  that  the  ability  to  keep 
accurately  the  accounts  and  books  of  a  business,  is  evidence 
of  business  ability,  or  is  to  be  regarded  in  any  respect  as 
supplying  the  want  of  skill  and  experience  in  the  actual  and 
practical  operations  of  buying  and  selling.  Good  book- 
keeping tends  only  to  save  and  turn  to  the  best  use  that 
which  is  already  made,  or  by  its  records  of  the  past  throw 
some  light  on  the  future  for  the  dealer's  guidance.  The 
best  kept  books  can  never  put  one  dollar  in  the  cash 
drawer,  but  they  may  save  hundreds  from  unnecessarily 
going  out,  if  there  has  been  suflSicient  talent  in  conduct- 
ing the  business,  to  put  them  in.  Careful  scoring  of  the 
shots  in  the  target,  will  enable  the  marksman  to  so  vary 
his  aim  that  he  can  each  time  come  nearer  the  mark,  but 
all  the  scoring  will  not  itself  put  a  ball  in  the  target. 


CHAPTER    XYIII. 


EXPENSES. 


AS  there  is  not  much  disposition  generally  to  retain 
clerks  when  there  is  nothing  for  them  to  do,  business  ex- 
penses will  to  a  great  extent  regulate  themselves.  Still 
there  is  some  difiference  in  the  proportional  expense  which 
different  men  incur  in  doing  business.  One  feels  the  ne- 
cessity of  working  arduously  himself — of  being  early  and 
late  at  his  business — and  at  the  head  of  everything.  An- 
other from  indolent  habits,  or  because  he  has  false  ideas 
of  dignity,  or  from  other  causes,  leaves  many  of  these  de- 
tails to  be  looked  after  by  a  sort  of  head  clerk.  The  for- 
mer, besides  having  his  business  better  attended  to,  and 
being  more  familiar  with  its  details,  thus  saves — if  not 
the  full  salary  of  such  a  head  clerk — at  least  the  difference 
between  that  salary  and  the  lesser  one  of  a  lower  grade 
clerk. 

Such  an  attentive  proprietor  also  sees  and  arrests  more 
promptly  any  unnecessary  waste  which  may  be  going  on 
in  any  department  of  his  business,  as  leakage  or  damage 
to  his  merchandise,  unnecessary  use  of  gas  or  lights,  etc. 
The  tools  or  utensils  of  business  last  longer  with  him,  be- 
cause taken  care  of.  Even  a  gross  of  steel  pens  will  last 
twice  as  long  in  such  a  man's  business,  as  in  one  who  pays 
no  attention  to  little  matters.  Some  people  may  think 
these  are  too  trifling  details  for  a  merchant  to  attend  to, 
but  if  the  indifference  be  once  reached  which  looks  with 
equanimity  on  the  unnecessary  waste  of  even  a  cent's 
worth,  depend  upon  it,  it  is  a  propensity  that  will  by  and 


272 


True  Ziberality  and  True  Bcononvy. 


by  increase,  and  lead  to  an  unprofitable  augmentation  of 
every  expenditure  in  the  business. 

There  is  a  wide  difierence  between  this  careful  atten- 
tion to  prevent  waste,  and  that  parsimonious  and  exact- 
ing method  of  dealing  which  every  liberal  man  condemns ; 
although  by  some  people  who  desire  to  be  thought "  whole- 
souled  fellows,"  they  are  often  confounded,  and  alike  con- 
demned. A  man  should  care  for  the  stoppage  of  a  leak 
in  a  cask  of  oil,  though  by  the  leak  he  may  not  lose  more 
than  a  quart  of  oil,  while  at  the  same  time  he  may  with 
propriety  give  away  that  much  in  retailing  out  the  cask 
to  insure  good  measure  to  his  customers.  The  waste 
enures  to  no  man's  profit,  while  the  good  measure  does, 
and  this  may  perhaps  be  taken  as  the  criterion  to  judge 
of  such  matters.  If  the  thing  gratuitously  parted  with 
benefits  a  customer,  it  may  be  called  a  liberality  j  if  no 
one  is  the  gainer  thereby  it  is  a  waste. 

A  dealer  should  be  careful,  too,  that  he  does  not  run 
into  an  error  in  the  opposite  extreme,  and  think  that  sav- 
ing is  making,  as  is  sometimes  done.  I  recollect  to  have 
once  seen  a  dealer  in  a  small  room  in  the  rear  of  his 
store-house,  straightening  some  crooked  nails  that  had 
been  drawn  from  the  covers  of  the  cases  in  which  his 
goods  came,  so  that  they  could  be  used  again,  while  in 
plain  view  of  him  were  customers  standing  at  his  counters 
waiting  their  turn  to  be  served.  If  a  dealer  could  find 
no  time  more  favorable  for  such  work,  it  would  be  econ- 
omy for  him  to  throw  his  crooked  nails  into  the  street. 
The  man  was  really  taking  a  little  recreation — deceiving 
himself  with  the  idea  that  it  was  a  work  of  economy  he 
was  laboring  at.  We  may  often  deceive  ourselves  in  this 
way,  and  be  amused  in  untangling  knotted  pieces  of 
twine,  straightening  nails,  and  picking  up  odds  and  ends, 
when  we  could  be  more  profitably  employed  in  making 
money  by  attention  to  our  legitimate  business. 


The  ^ate   :Expenses  should  Sear  ia  profits.    273 

The  expense  of  rent,  though  considered  somewhat  in  a 
previous  chapter  on  "  choice  of  location,"  requires  look- 
Lg  at  from  another  point  of  view.  It  should  always 
bear  a  relation  to  the  amount  of  sales  and  profits.  \\  o 
sometimes  hear  one  remark  who  proposes  to  take  a 
choice  location  at  a  high  rent,  "  it  is  worth  as  much  to  me 
as  to  any  one."  But  this  principle  is  an  unsafe  guide.  11 
other  people's  calculations  as  to  what  a  store  may  be 
worth  to  them  were  always  correct,  it  might  be  safer  to 
go  by  their  judgment.  But  it  is  oftentimes  found  that 
the  rash  and  inexperienced  are  the  ones  most  prone  to 
take  such  expensive  localities.  And  it  is  often  therefore 
equivalent  to  saying  that  we  with  our  best  information  and 
experience  will  be  governed  in  our  business  course  by 
those  who  have  neither. 

When  a  dealer  is  doing  well,  it  is  prudent  to  rather 
sacrifice  a  considerable  prospect  of  doing  better,  which 
will  involve  him  in  a  much  heavier  expenditure  for  rent. 

Precisely  what  rate  proportional  to  profit  should  be 
considered  reasonable  and  prudent,  will  depend  some- 
what on  the  kind  of  goods  sold,  and  the  character  of  the 
business;  as  some  kinds  of  business  can  not  be  success- 
fully carried  on  except  in  prominent  locations,  where 
rents  are  generally  high,  and  if  unprofitable  there  would 
probably  be  still  more  so  in  a  location  less  conspicuous. 

Ten  per  cent  on  the  gross  profits  of  a  retail  business 
ou^ht  not  ordinarily  to  be  deemed  too  great  a  rent,  while 
twenty  per  cent  may  be  regarded  as  excessive.  And  yet 
if  the  other  business  expenses  are  not  very  heavy,  and 
the  business  is  materially  more  profitable  m  a  location 
requiring  higher  rent,  such  a  proportion  might  be  under- 
taken with  fair  prospects  of  success. 

In  the  aggregate,  a  retailer's  total  expenses,  mcluding 
those  of  his  private  living,  ought  not  to  exceed  one-half 


274 


^Private  £^xpenses  of  the  dealer. 


Ziving    Within  the  Income, 


275 


the  gross  profits  of  his  business.  There  will  ordinarily  be 
losses  from  sources  heretefore  referred  to,  which  will 
take  from  fifteen  to  twenty-five  per  cent  more  of  the  gross 
profits  to  cover  them,  even  in  a  very  carefully  conducted 
business,  leaving  only  from  twenty-five  to  thirty-five  per 
cent  net  of  the  gross  profits.  If  care  is  not  taken  to  keep 
down  the  expenses,  even  this  is  readily  absorbed,  leaving 
no  profit  to  the  dealer. 

It  is,  however,  more  especially,  the  matter  of  private 
expenses  that  I  intended  to  discuss  in  this  chapter. 

Too  often  these  are  rated  not  according  to  the  income 
from  the  business,  but  the  income  is  hardly  considered  at 
all.  The  dealer  and  his  family  live  as  he  thinks  is  pro- 
per to  their  station,  or  as  their  neighbors  and  friends  do, 
and  then  he  strives  to  make  the  amount  of  his  expenditure 
from  his  business.  If  he  succeeds,  well — if  he  does  more, 
and  makes  money  beyond  his  expenses,  better — but  if 
unsuccessful — "  well,  he  must  live,"  "  the  world  owes  him 
a  living,  any  way,"  "  he  works  hard  enough  for  it " — and 
if  his  expenses  exceed  his  income,  so  much  the  worse  for 
his  creditors. 

It  is  not  too  much  to  say  that  one-half  the  failures  in 
business  among  retailers  have  their  cause  in  extravagant 
expenditure.  Not  extravagant  living ;  for  it  would  be 
hard  for  a  man  with  an  ordinary  family  to  live  extrava- 
gantly on  from  one  to  two  thousand  dollars  a  year,  which 
is  perhaps  the  average  expenditure  of  the  class  I  speak 
of.  But  the  expenditure  is  extravagant  when  it  exceeds 
the  income,  just  as  much  so  as  it  would  be  in  an  ordinary 
day  laborer  earning  but  one  dollar  a  day,  to  spend  by 
running  in  debt  twice  that  sum  in  living. 

It  can  honestly  only  be  called  swindling,  for  any  dealer 
to  continue  from  year  to  year  to  expend  more  than  his  net 
profits  wai-rant,  when  the  result  at  last  is  to  be  that  those 


who  credit  him  will  not  be  paid.  Ignorance  of  his  income 
can  be  no  valid  excuse,  when  the  expenditure  is  kept  up 
year  after  year.  And  when  the  ignorance  is  willful,  as  in 
the  case  of  a  dealer  who  suspects  that  he  is  not  making  his 
expenses,  and  who  yet  refrains  from  taking  any  inventory, 
or  from  examining  closely  into  his  own  standing  and 
ability,  lest  the  insolvency  which  he  fears  may  be  posi- 
tively proven  to  him,  such  ignorance  is  criminal. 

it  has  been  so  often  exemplified  in  our  experience,  that 
"  a  man  who  lives  on  a  salary  never  grows  rich,"  as  to 
have  passed  into  a  proverb. 

The  reason  undoubtedly  is  the  tendency  of  most  men 
to  live  up  to  their  income.     And  the  cause  why  prudent 
men  in  business  do  sometimes  grow  rich,  is  because  their 
income  being  uncertain,  they  confine  their  expenditure  to 
the  lowest  probable  sum  that  it  will  be,  so  that  they  may 
be  sure  of  not  living  beyond  their  income ;  and  the  dif- 
ference between  tliis  low  estimate  and  the  actual  profit, 
leaves  at  the  end  of  each  year  a  surplus— greater  or  less, 
according  to  the  prosperity  of  the  year's  business.    This 
surplus,  small  though  it  may  be,  is  the  nucleus,  around 
which  if  properly  kept  turning,  a  fortune  soon  gathers. 
There  is  no  good  reason  why  a  man  doing  a  retail  busi- 
ness of  any  kind,  should,  if  the  profits  of  his  business  are 
no  gieater  than  the  wages  of  a  day  laborer,  live  any  more 
expensively  than  the  laborer.     His  occupation  is  not  so 
especially  a  necessary  one  to  the  community,  that  the  laws 
of  morality  should  be  changed  to  suit  his  ideas  of  what 
is  appropriate  to  his  station,  so  that  what  is  fraud  in  an- 
other is  excusable  in  him. 

It  is  besides  always  judicious  for  a  retailer  to  adopt  a 
moderate  and  unobtrusive  style  of  living,  even  if  he  can 
afford  to  live  more  ostentatiously.  When  a  man  in  busi- 
ness adopts  a  style  of  living  and  expenditure  far  beyond 


\\ 


276  deducing  Mcpenses  by  Stern  JVecessUy. 

the  reach  of  his  customers,  it  oflen  creates  a  feeling  among 
them  that  he  is  making  too  much  profit  out  of  them,  and 
this  reacts  injuriously  upon  his  trade.  The  sympathy  and 
good  wishes  of  his  customers  are  withdrawn  in  a  mea- 
sure from  him,  and  bestowed  on  those  of  his  rivals  who 
seem  by  the  economy  of  their  living  to  be  in  greater  need 
of  their  patronage. 

Besides  it  is  much  easier,  as  all  the  world  knows,  to 
increase  one's  private  expenditure,  than  it  is  to  reduce  it ; 
and  there  is  danger  in  increasing  these  expenses  too  fast, 
even  though  the  profits  of  the  business  may  seem  to  well 
warrant  it.  There  is  always  an  uncertainty  regarding 
the  continuance  of  prosperity  in  business,  that  should  not 
be  lost  sight  of,  lest  by  the  time  the  increased  private  ex- 
penses catch  up  with  the  increased  prosperity  of  the  busi- 
ness, the  latter  may  receive  a  check,  and  be  materially  re- 
duced, perhaps  even  below  its  former  extent,  while  the 
private  expenditure  can  not  be  so  readily  brought  down. 
This  is  only  reduced  by  stern  necessity,  and  that  "  stern 
necessity  "  is  too  often  never  found  short  of  insolvency. 
It  is  of  the  character  of  that  referred  to  once  by  a  south- 
ern trader,  who  told  me  "  his  customers  rarely  paid  their 
notes  except  under  a  stern  necessity,  and  that  was  when 
the  sheriff  was  at  the  door  with  the  execution  in  his 

hand." 

One  reason  wny  the  private  expenses  of  a  retailer  are 
apt  to  exceed  that  of  other  people  as  prosperously  en- 
gaged in  other  occupations  is,  the  possession,  in  the  traflic 
of  the  business,  of  so  many  of  the  articles  of  luxury  and 
convenience  in  daily  use  by  his  customers,  and  through 
this  possession  a  continuous  temptation  to  enjoy  the  use  of 
them.  If,  for  instance,  one  customer  A  indulges  in  one 
article  of  this  character,  B  in  another.  C  in  a  third  and 
D  in  a  fourth,  each  foregoing  the  use  of  what  the  other 


The  ^ealer^s  TemptaHons  to  JRJxtravagance,    277 

three  purchase,  the  dealer,  regarding  himself  as  well  able  to 
indulge  in  such  things  as  either  of  them  separately,  man 
ages  to  combine  in  his  expenditure  all  the  luxuries  and 
comforts  enjoyed  by  the  combmed  four 

Possibly  the  requirement  that  a  dealer  should  have  a 
strong  belief  in  the  necessity  for,  or  advantage  to  be  de- 
rived from,  the  use  of  any  article  in  which  he  dea  s  tha 
he  may  more  pointedly  and  heartily  commend  it  to  his 
customers,  reacts  too  easily  on  himself,  mducing  him  to 
feel  too  greatly  the  want  of  the  article  in  his  own  case 
If  this  be  so,  it  shows  the  importance  of  keepmg  these 
desires  in  check,  and  the  duty  of  limiting  himself  m  the  use 
of  such  articles,  the  expense  of  which  he  may  not  be  well 
able  to  afford;   and  when  strongly  tempted  to  mcur  any 
such  expense,  to  specially  reflect  whether  his  business  is 
profitable  enough  to  permit  the  indulgence  in  so  many 
luxuries.     Perhaps  in  nothing  is  this  temptation  so  great 
as  in  dress  ;  but  there  are  many  other  things  of  convenient 
use  in  families,  that  are  also  seemingly  indispensable,  par- 
ticularly new  inventions  which  promise  greater  economy 
or  con;enience  in  use,  than  the  articles  they  are  designed 

to  supplant.  .  , 

One  of  the  influences  tending  to  induce  economy  in 
personal  expenditure  in  small  matters,  is  the  want  of  ready 
money  to  purchase  them.    We  often  forego  the  purchase 
of  an  article  that  seems  very  desirable  to  have  on  this  ac- 
count, not  wanting  to  incur  a  debt,  or  perhaps  having  no 
credit  established  in  the  store  where  we  see  it.    Among 
retailers  who  may  be  supposed  to  always  have  on  hand 
either  the  article  itself  or  sufficient  money  to  buy  it,  thisre- 
straining  influence  is  of  course  generally  wantmg.    The 
practice,  which  is  too  prevalent  among  small  dealers    of 
using  the  money  drawer  as  their  private  purse,  and  takmg 
therefrom  whatever  may  be  required  to  meet  the  mcv 

24 


il 


278 


A.dyaniages  of  a  Private  ^urse. 


mentary  want — either  fancied  or  real — greatly  encourages 
extravagant  expenditure.  No  matter  whether  an  account 
of  such  money  be  kept  or  not,  the  practice  is  a  bad  one. 


As  also  is  the  habit  of  taking  for  private  use  articles  kept 


for  sale,  simply  charging  them  to  an  account  against  the 
dealer ;  or  still  worse,  as  is  often  the  case,  making  no 
charge  of  them  at  all. 

An  example  of  this  class  is  the  retailer's  wife,  of  whom 
the  story  is  told,  that  on  being  asked  by  an  acquaintance 
what  a  certain  article  of  dress  she  wore  cost,  answered, 
"  Oh,  it  didn't  cost  anything,  you  know  my  husband  keeps 
store  now,  and  I  got  it  there !  "  When  a  retailer  has  a 
large  family,  and  this  idea  prevails  among  them,  even  in  a 
limited  degree,  it  will  not  be  difficult  for  him  to  expend  more 
than  the  profits  of  his  business.  As  an  aid  in  restrain- 
ing undue  expenditure,  it  is  an  excellent  plan  for  a  retailer 
to  draw  from  his  business  weekly  or  monthly,  such  regu- 
lar sums  as  by  careful  calculation  at  the  commencement 
of  the  year  he  may  conclude  he  can  afford  for  his  pri- 
vate expenses,  and  with  this  make  from  time  to  time  such 
purchases  from  his  own  stock  or  elsewhere,  as  he  re- 
quires or  this  sum  affords;  and  avoid  running  any  ac^ 
count  with  himself  or  others  for  such  private  expenses. 

The  state  of  the  private  purse  will  then  frequently 
determine  the  question  as  to  the  propriety  of  any  con- 
templated purchase.  If  such  a  course  were  adopted  and 
rigidly  adhered  to,  three-fourths  of  the  failures  among 
retailers  would  never  occur ;  as  experience  shows  that 
in  fully  that  proportion  of  failures  undue  expenditure, 
either  consciously  or  unconsciously,  was  largely  the  pro- 
moting cause  of  the  disaster.  The  continuance  of  an  ex- 
penditure averaging  five  hundred  dollars  a  year — or  even 
three  hundred — in  excess  of  the  net  profits,  running  through 
five  or  six  years,  makes  serious  inroads  into  the  capital  of 


( 


d  Good  Method  to  Limit  Bxpenses, 


279 


most  retailers,  and  generally  ends  with  the  creditors  of 
the  concern  being  called  on  to  take  from  twenty-five  to 
fifty  per  cent  of  their  claims,  and  thus  they  in  the  end 
have  to  foot  the  bills  of  the  dealer's  expenditure. 

This  ruinous  result  is  often  aided  by  a  disregard  of 
what  may  be  called  the  uncertain  losses  of  the  business. 
At  the  end  of  the  year  the  expenses  have  been  incurred,  and 
the  business  has  not  been  prosperous,  but  the  dealer  does 
not  like  to  own  to  himself  that  he  has  expended  more  than 
he  has  made :  so  he  omits  making  a  sufiicient  reduction  on 
his  old  stock  of  merchandise,  and  defers  carrying  over  to 
his  profit  and  loss  account  outstanding  claims  which  are 
really  hopeless,  but  which  he  strives  to  think  will  yet 
turn  out  good,  and  by  these  means  or  omissions  a  nomi- 
nal profit  on  the  year's  business  is  shown  which  fully 
covers  his  private   expenses. 

When  the  business  is  not  large,  and  is  m  its  character 
somewhat  uncertain,  as  most  are  in  the  extent  of  sales 
and  profits,  it  may  prove  unsafe  to  estimate  for  the  expen- 
diture of  the  coming  year  entirely  from  the  results  of 
previous  years.  The  business  may  fall  off  largely  durmg 
the  year,  and  it  is  advisable  therefore  that  whatever  has 
been  set  down  as  the  limit  for  private  expenses  should  be 
subject  to  reduction  as  the  year  advances. 

In  a  very  small  business,  where  perhaps  the  capital 
would  be  sunk  by  such  drafts  before  the  year  expired 
if  there  were  diminished  profits,  it  is  a  safe  way  to  limit 
the  expenditure  to  a  certain  per  cent  on  the  profits  of  the 
week.  The  exact  proportion  of  the  profits  being  settled 
upon,  that  can  with  safety  to  the  business  be  drawn  for 
private  expenses  without  diminishing  the  capital,  which 
is  still  retained  intact  to  keep  up  the  business,  they  can 
be  daily  or  weekly  set  apart  and  used  for  such  purposes. 
This  method  requires  very  little  knowledge  of  book-keep- 


280       Importance  of  Economy  to  the  :Beffinner, 

ing,  or  of  accounts,  only  enough  to  know  what  the  aver- 
age per  cent  of  gross  profits  on  each  dollar  sold  is,  and 
what  proportion  of  this  can  be  used  as  the  net  profit. 
It  is  peculiarly  applicable  to  small  dealers  and  mechanics, 
as  thread  and  needle  stores,  milliners,  green  grocers, 
butchers,  bakers,  smiths,  etc.,  apd  has  the  merit  of  being 
easily  comprehended  and  a  pretty  safe  guide  in  enterprises 
of  a  more  extensive  character. 

Probably  more  fortunes  are  made  by  a  saving  economy 
in  expenses  during  the  first  few  years  of  business,  than 
are  made  by  great  profits.  The  difference  of  five  hundred 
dollars  a  year  in  expenses,  for  the  first  ten  years  of  a  young 
man's  business  life,  will  possibly  be  all  the  difference  be- 
tween poverty  and  a  competence  at  sixty. 

It  is  not  only  the  yearly  $500  and  its  interest  accumula- 
tions which  make  the  sum  total,  large  as  these  are  shown 
to  be,  further  on  in  this  book ;  but  it  is  the  advantages  de- 
rived from  the  habit  of  economy  gained,  which  con- 
tinues to  some  extent  through  life,  and  from  having  this 
surplus  of  profit  to  use  in  the  early  years  of  business,  and 
which  is  worth  to  the  dealer  at  this  period  far  more  even 
than  the  simple  interest  which  it  would  bring  if  invested. 


CHAPTEIi   XIX. 


COPARTNEESHIP. 


The  custom  of  forming  copartnerships  to  carry  on  va- 
rious branches  of  mercantile  business,  is  so  prevalent  that 
it  is  quite  appropriate  to  discuss  some  of  the  most  promi- 
nent features  of  this  relationship,  and  indicate  the  par- 
ticular points  which  should  be  kept  in  view  in  forming  one. 

The  main  object  to  be  attained  by  the  formation  of  a 
copartnership  would  seem  theoretically  to  be  the  creation, 
by  the  joint  abilities  of  two  or  more  persons,  of  one  whole, 
complete,  and  perfect  business  management. 

One  who  has  ability  to  plan  and  arrange,  and  initiate 
business  enterprises,  may  think  himself  lacking  in  perse- 
vering attention  to  details,  without  which  his  undertakings 
will  rarely  be  profitable.  Another  with  but  limited 
ability  for  the  inception  or  origination  of  projects,  can 
efiiciently  aid  by  his  indefatigable  energy  and  industry, 
those  who  can  plan.  Other  circumstances  being  not  un- 
favorable, two  such  persons  would  ordinarily  succeed  well 
in  business  as  copartners.  Again,  one  man  may  be  prompt, 
bold,  and  almost  rash  in  his  business  enterprises,  though 
able  to  both  plan  and*  carry  out  his  projects;  if  connected 
with  another  who  is  over-cautious  and  too  timid  to  en- 
gage in  even  ordinary  risks,  the  alliance  might  be  bene- 
ficial to  both.  Or  one  man  may  have  sufiicient  capital 
for  a  business  without  the  proper  experience ;  he  would 
require  in  a  partner,  not  capital,  but  business  ability  and 
skill ;  and  the  two  would  together  bring  to  the  business 
all  that  is  necessary  for  its  successful  prosecution. 


I 


282 


What  is  Required  in  a  partner. 


S>iversity  of  Gf/ls  Sarmonj^  of  Tien^s, 


283 


ii 


It  will  be  readily  seen,  therefore,  that  what  is  more 
especially  needed  in  selecting  a  partner  is  not  similarity 
of  business  attainments,  but  rather  such  different  charac- 
teristics as  will  make  each  partner  the  complement  of  the 
other.  Though  it  is  not  meant  that  in  practice  this  is 
reached,  or  can  be,  as  all  men  have  more  or  less  know- 
ledge or  ability  on  all  points.  It  is  only  intended  to  refer 
to  the  prominent  points  or   characteristics. 

When  a  person  is  proposing  to  form  a  partnership,  the 
first  consideration  should  be  what  be  can  do  well  himself, 
and  what  he  can  not  do  so  well.  Then  the  consideration 
as  to  whether  the  proposed  partner  can  and  will  supply 
his  deficiencies.  These  enquiries  are  generally  too  cur- 
sorily made,  and  it  is  often  found  after  a  partnership 
has  been  formed,  that  the  partners  were  greatly  de- 
ceived in  regard  to  the  peculiar  abilities  of  each  other. 
We  are  too  ready  to  jump  at  the  conclusion,  when  we  are 
lacking  in  any  qualification  for  business,  that  any  other 
person  whom  chance  may  happen  throw  in  our  way  as  a 
partner,  can  supply  our  deficiency. 

There  ought  also  always  to  be  a  clear  understanding 
between  the  contemplated  partners,  as  to  the  various  de- 
tails of  the  business  which  each  is  best  fitted  to  take  care 
of.  It  is  sometimes  found  after  a  partnership  is  made, 
and  the  actual  work  of  business  is  commenced,  that  this  has 
not  received  sufficient  attention .  Each  partner  has  thought 
over  the  matter,  and  assigned  that  duty  to  the  other, 
this  to  himself,  all  through  the  ^ork ;  and  it  is  found  when 
the  trial  comes  that  there  are  many  things  to  be  attended 
to,  which  neither  wants  to  do,  nor  can  do  well.  If  this 
subject  was  freely  canvassed  beforehand,  and  no  undue 
encouragement  given  to  either  partner  to  undertake  duties 
be  felt  himself  unequal  to,  and  the  labor  of  the  business 
was  fairly  divided  between  the  partners  according  to 


their  qualifications,    many  of  the  difficulties    and  quar- 
rels which  sometimes  occur  in  such  associations  would  be 

avoided. 

"  I  was  very  much  deceived  in  that  man,"  is  often  the 
exclamation  of  one  just  released  from  a  disagreeable  or 
incompetent  partner.  But  why  deceived?  Nine  times 
out  of  ten  because  it  had  been  assumed  at  the  outset  that 
the  partner  would  perform  certain  duties,  which  he  had 
never  agreed  to  perform,  and  for  which  he  had  not  suffi- 
cient skill  or  experience  to  bring  to  a  profitable  issue. 

No  man  who  forms  a  copartnership  with  another  with- 
out a  full  understanding  on  these  points,  has  any  more 
right  to  regard  himself  as  deceived  by  his  partner's  course, 
than  he  would  be  deceived,  if  confiding  in  the  disposition 
of  a  strange  horse  to  stand  without  tying,  he  should 
leave  him  in  the  street  unfastened,  and  after  a  mo- 
mentary absence  return  to  find  him  running  away. 

While  there  should  be  a  diversity  of  business  attain- 
ments and  gifts  between  copartners,  it  is  desirable  that 
there  should  be  a  concord  and  harmony  of  views  in  rela- 
tion to  the  best  method  of  transacting  the  business,  so 
that  each  one's  time  is  not  diverted  from  his  department, 
or  too  much  occupied,  in  urging  upon  his  copartner  the 
adoption  of  his  ideas  upon  what  might  be  called  the 
fundamental  principles  on  which  the  business  shall  be  con- 
ducted. Nor  should  there  even  be  such  a  diversity  of 
opinion  about  the  daily  transactions  as  to  require  too  long 
a  discussion  to  convince  a  reluctant  partner.  The  object 
supposed  to  be  accomplished  in  having  the  consent  of  all, 
is  a  better  chance  of  success  when  the  operation  is  con- 
ducted under  the  joint  intelligence  of  two  or  more  part- 
ners. But  when  this  mutual  consent  is  only  to  be  ob- 
tained after  long  and  continuous  urging  on  one  side, 
and  then  perhaps  only  a  reluctant  assent  at  last,  as  will 


284 


Importance  of  Z/nanin^ty, 


geoerally  be  the  case  where  the  copartners  have  diverse 
views  on  the  fundamental  principles,  the  business  is 
likely  to  be  a  failure,  not  only  in  its  theoretical  end,  but 
also  in  its  practical  end  of  profit. 

The  enterprises  of  a  business  require  a  promptness  in 
action  to  make  them  profitable,  which  is  only  attainable 
by  a  full  and  complete  conclusion  of  the  mind,  that  the 
end  will  be  a  successful  one.  So  long  as  there  are  doubts 
intervening,  or  a  partner  who  is  from  time  to  time  urging 
objections  to  the  transaction  while  it  is  in  progress,  so  long 
will  there  be  hesitancy  and  procrastination,  and  therefore 
unthrift  in  the  business. 

It  is  in  this  view  that  Bonaparte's  remark  that  "  one 
bad  general  is  better  to  conduct  an  army  in  battle  than 
two  good  ones,"  becomes  a  truth.  The  one,  from  his 
ability  to  come  to  a  ready  conclusion,  will  act  promptly 
and  with  vigor,  and  even  if  on  account  of  bad  general- 
ship, he  is  only  half  successful,  still  in  the  main  his  re- 
sults will  be  greater  than  if  two  men  of  superior  attain- 
ments have  charge  of  the  army,  when  from  failure  on 
their  part  to  agree  quickly  as  to  the  best  course  to  be  pur- 
sued, the  golden  opportunities  will  pass  by  in  inaction. 

In  business  as  in  war,  things  are  proper  to  be  done  or 
left  undone,  according  to  the  circumstances  of  the  hour. 
It  may  be  very  desirable  to  buy  or  sell  an  article  to-day 
at  the  market  price,  and  very  unadvisable  to  do  either  to- 
morrow. And  a  man  who  expects  to  succeed  in  business 
must  therefore  make  up  his  mind  quickly  in  view  of  the 
present  circumstances,  and  act  promptly. 

To  obtain  this  advantage  in  a  copartnership  it  is  a  good 
plan  for  each  partner  to  have  a  special  charge  over  certain 
departments  of  the  business,  and  be  the  prime  mover  and 
operator  in  these  departments ;  the  action  of  the  other 
partner  in  them  being  only  advisory  or  assisting.    A  very 


division  of  l>utles. 


286 


Kttle  common  sense  induces  this  kind  of  division  of  re- 
sponsibility in  most  cases,  but  it  is  oftener  the  result  of 
chance  and  circumstance,  than  it  is  of  a  calculation  or 
estimation  of  the  peculiar  ability  of  the  partner  to  pro- 
perly manage  the  department  he  takes  charge  of.     Mod- 
■  eration  is  to  be  shown  by  the  other  partner  who  has  not 
charge  of  the  department,  in  urging  his  advice  upon  the 
one  who  has  the  charge,  lest  the  latter  be  induced  some- 
times  to  act  contrary  to  his  own  judgment,  with  a  desire 
to  carry  out  the  wishes  of  his  copartner.     Such  a  course, 
though  it  may  in  some  instances  prove  beneficial  to  the 
concern,  will  in  the  end  be  injurious  by  taking  away  from 
the  managing  partner  the  burden  of  responsibility  for  the 
success  of  that  part  of  the  business  under  his  own  super- 
vision.   Probably  this  influence  is  most  frequently  exer- 
cised in  unduly  magnifying  or  dwelling  on  the  difficulties 
that  lie  in  the  way  of  any  contemplated  action,  inasmuch 
as  it  is  not  so  hard  to  induce  a  man  to  forbear  in  any 
given  case  in  which  he  may  be  disposed  to  act,  as  to  in- 
duce an  action  in  a  similar  case  when  he  is  disinclined. 
The  precise  extent  to  which  advice  may  go  in  such  cases, 
depends  a  good  deal  on  the  disposition  and  character  of 
the  partner  advised.    Some  men  are  naturally  so  timid 
and  cautious  about  entering  into  any  undertaking,  that  a 
word  or  two  of  doubt  from  even  an  indifferent  person 
completely  dampens  their  enthusiasm,  while  others  more 
rash  and  headstrong  need  a  clear  and  repeated  demonstra- 
tion of  the  impracticability  and  hopelessness  of  any  pro- 
posed undertaking  before  they  will  give  it  up.     But  as 
before  remarked,  this  advisory  influence  should  never  be 
carried  to  the  extent  that  the  acting  partner  on  the  occa- 
sion can  feel  rid  of  personal  responsibUity  for  the  success 
of  the  undertaking. 

In  dividmg  up  the  details  of  the  business  in  this  way 


286 


Too  Much  Independence, 


so  that  each  partner  has  a  certain  portion  of  the  business, 
for  the  proper  management  of  which  he  is  held  respon- 
sible, it  is  necessary  to  guard  against  a  danger  of  the  op- 
posite character  which  often  finds  countenance  in  partner- 
ships, especially  where  there  are  several  partners,  of  too 
great  an  independence,  or  a  forgetfulness  of  the  depend- 
ence of  the  business  as  a  whole,  on  the  combined  skill 
of  the  partners.  Each  partner  gets  into  the  habit  of 
attending  to  the  duties  of  his  special  branch,  without  suffi- 
cient co-operation  with  the  other  partners.  Indeed,  they 
often  become  jealous  of  any  interference^  as  they  would 
designate  a  partner's  solicitous  enquiries  about  their  ac- 
tions. The  fear  of  this  interference  induces  an  unwilling- 
ness to  give  counsel  to  the  other  partners  in  their  depart- 
ments, and  thus  the  chief  advantage  of  the  copartnership, 
— mutual  advice  and  assistance — is  lost  to  the  business. 
The  whole  business  is  a  unity  or  one,  and  should  act  from 
one  centre  of  thought,  though  that  centre  be  the  com- 
bined skill  and  intelligence  of  a  dozen  men.  Each  de- 
partment should  be  in  thorough  subjection  to  the  exi- 
gencies and  requirements  of  every  other  department.  In 
a  copartnership  where  one  attends  to  the  buying,  another 
to  the  selling  and  another  to  the  finances,  each  inde- 
pendently and  without  full  consultation  with  the  others, 
it  can  not  be  expected  that  the  purchases  will  be  made 
with  as  strict  a  regard  to  the  demand,  or  the  means  of 
payment,  nor  the  sales  made  always  in  view  of  the  state 
of  the  market  and  the  supply,  nor  the  finances  managed 
so  as  to  have  no  lack  of  money,  and  yet  always  keeping 
the  capital  employed,  as  when  there  is  a  full  and  free  in- 
terchange of  mutual  advice  from  each  one  to  the  others, 
or  in  the  absence  of  this,  a  superior  head  over  all. 

Perhaps  the  difficulty  referred  to  is  more  likely  to  oc- 
cur in  partnerships  where  there  has  been  originally  such 


The  JVecessity  /or  a  Leader. 


287 


a  superior  "head  man  or  principal  partner  with  younger 
copartners,  and  the  principal  partner  subsequently  with- 
drawing from  the  business,  leaving  the  other  partners, 
each  accustomed  to  attend  to  his  department,  and  all 
about  on  an  equality  of  capacity  and  experience.  In 
such  a  case,  the  counselling  partner  having  left,  there 
is  no  one  sufficiently  gifted  to  precisely  fill  his  place,  and 
to  combine,  arrange,  and  manage  the  relations  between 
the  several  departments,  which  can  only  be  well  done  by 
some  general  knowledge  of  them  all. 

Time  and  trials  usually  bring  out  the  best  man  of  the 
firm,  and  if  ambitious  he  assumes,  or  if  modest,  is  called 
upon  to  assume  the  position  of  leader.  This  best  man 
would,  however,  sooner  be  brought  out,  and  often  with 
less  loss  to  the  firm,  if  the  necessity  for  him  were  appa- 
rent from  the  first. 

Commonly  the  burden  of  business  does  not  rest  so 
heavily  on  a  man  who  is  only  a  partner  in  a  concern,  as 
when  he  is  alone.  In  the  partnership  the  debts  do  not 
seem  to  be  his,  nor  does  the  loss  of  reputation,  when  the 
business  happens  to  be  a  failure,  seem  to  bear  so  heavily 
on  him.  Too  frequently  partnerships  are  therefore  exem- 
plifications of  the  old  saying,  that «  what  is  everybody's 
business  is  nobody's  business."  The  great  majority  of 
instances  where  equal  partnerships  have  been  success- 
ful,  are  those  where  there  was  only  one  leading  directing 
mind  in  the  partnership,  and  the  other  copartners  were 
but  intelligent  and  confidential  instruments  in  carrying 

out  his  plans. 

Such  a  leading  mind  is  not  by  any  means  always  found 
occupying  the  position  of  principal  partner.  Those  who 
have  an  age  and  experience  sufficient  to  give  them  thirty 
or  forty  years  observation  of  the  careers  of  business 
houses,  can  readily  call  to  mind  numerous  instances  of 


K  if 


288  Apoidinff  Causes  of  S>isagre€menL 

firms,  that  after  remaining  years  in  obscurity,  at  once  shot 
up  to  a  prominence  in  the  community  for  their  enterprise, 
and  quickly  accumulated  wealth,  and  can  readily  trace 
the  cause  to  the  introduction  into  the  firm  of  some  iictive, 
energetic  man— perhaps  a  former  clerk— whose  great 
business  talent  was  everywhere  conspicuous  in  the  under- 
takmgs  of  the  firm.  Or  in  like  manner  will  recollect 
other  enterprising  and  successful  business  houses,  that  on 
account  of  the  ability  of  some  one  member,  stood  in  the 
first  rank,  and  subsequently  on  his  withdrawal,  though 
he  was  perhaps  only  a  junior  partner,  they  soon  sunk  into 

partial  obscurity. 

We  may  therefore  conclude  that  for  such  m.en  of  super- 
eminent  abilities,  when  they  have  sufficient  capital,  equal 
partnerships  would  not  be  preferable.  They  have  the 
ability  to  conduct  all  parts  of  the  business  profitably,  and 
need  not  involve  themselves  in  the  risks  incidental  to  a 

partnership. 

It  is  always  desirable  that  there  should  be  socially  a 
unison  of  views  and  opinions  on  the  ordinary  topics  of 
life  between  persons  who  are  copartners  in  business. 
Men  of  differing  religious  or  political  belief,  particularly 
if  of  strong  feelings,  should  be  cautious  about  entering 
into  partnership  together.  Citizens  of  different  countries 
are  not  apt  to  agree  well  together.  We  all  have  our  sym- 
pathies for  and  prejudices  against  certain  classes  and 
things,  and  though  we  should  endeavor  to  put  them  aside 
in  business  matters,  they  can  never  be  entirely  subdued. 
There  will  always  be  matters  of  difference  enough  con- 
nected with  the  business,  even  when  the  most  charitable 
construction  is  put  upon  the  copartner's  actions,  and 
they  will  only  be  augmented  by  social  variance.  These 
little  differences,  too,  can  never  be  accommodated  and 
conciliated,  except  by  an  abiding  faith  in  the  supreme 


The  Credit  of  partnerships. 


289 


good  intent,  and  good  will  of  the  copartner,  a  faith  very 
difficult  to  hold  if  we  are  prejudiced  against  his  nation, 
race,  religion,  politics,  habits,  or  customs. 

The  most  satisfactory  copartnerships  have  been  where 
one  individual  has  conducted  a  business  in  a  moderate 
way  at  first,  and  as  his  clerks  grew  up  under  his  care  and 
teaching,  the  gradual  increase  of  the  business  has  made 
openings  for  them  as  junior  partners.  Their  shares,  small  at 
first,  were  sufficient  to  induce  increased  exertion  on  their 
part,  and  finally  on  the  retirement  of  the  senior  partner, 
they  become  equally  sharers  in  the  succession.  There 
are  dangers  incident  to  such  arrangements,  needing  to 
be  guarded  against.  There  is  a  tendency  often  to  too 
much  reliance  on,  and  too  much  waiting  for,  the  action 
of  the  older  partner  on  the  side  of  the  younger  ones, 
and  perhaps  a  disposition  on  the  part  of  the  older  part- 
ner  to  cease  giving  the  attention  to  the  business  which 
is  really  necessary,  on  the  ground  that  he  now  has  part- 
ners  to  attend  to  it,  and  between  them  the  busmess  loses 

^"^Thl  credit  of  a  firm  is  generally  better  than  that  of  a 
single  individual  with  the  same  amount  of  capital,  owmg 
to  the  lessened  risk  of  delay  in  payment  of  debts  m  case 
of  death.  When  a  single  trader  dies,  those  who  have  the 
settlement  of  his  affairs  are  allowed  fro«i  twelve  to 
eighteen  months  to  pay  in ;  while  in  case  of  the  death  of 
one  partner  of  a  partnership,  the  surviving  partner  is  en- 
titled to  control  the  assets  of  the  business,  and  is  himselt 
still  bound  to  meet  the  obligations  at  maturity.  This  cir- 
cumstance  alone  may  make  it  sometimes  desirable  that  a 
partnership  should  be  formed  with  some  one,  who  is  hon- 
est and  reliable,  even  if  of  inferior  business  talents,  so 
that  in  case  of  the  death  of  the  principal  man,  the  busmess 
can  be  promptly  liquidated. 


290        £:inds  of  business  IHequiring  partners. 

In  localities  where  rents  are  high  and  expenses  heavy, 
and  where  even  a  fair  business  can  be  readily  doubled  by 
doubling  the  capital  and  the  attention  to  the  business,  it 
may  be  advantageous  for  two  persons,  who  separately 
would  be  rival  dealers,  to  throw  their  interests  into  one  con^ 
cern  by  forming  a  partnership.  Together  they  may  do  as 
much  business  as  both  will  do  separately,  with  but  little 
more  cost  in  rent  and  expenses  than  one  would  incur  alone. 

There  are,  too,  some  kinds  of  business  which  in  their 
nature  seem  to  require  a  double  service,  and  cannot  be  so 
well  conducted  by  a  single  person.  Such  as  those  where 
it  is  necessary  to  spend  a  considerable  portion  of  the  time 
away  from  the  place  of  business  in  purchasing,  or  where 
the  article  sold  is  manufactured  by  the  dealer,  and  the 
manufacture  requires  constant  attention  and  supervision. 
In  such  cases  if  the  principal  is  alone  in  business,  and  at- 
tends to  these  details,  he  is  much  of  the  time  away  from 
the  place  where  the  sales  are  made.  Either  one  part  or 
the  other  must  be  left  largely  to  the  care  of  his  employees, 
and  either  part  is  too  important  to  be  left  so  entirely  to 
the  care  of  a  person  having  so  remote  a  general  interest 
as  is  ordinarily  felt  by  an  employee.  A  partnership  in 
such  cases  is  likely  to  be  advantageous,  if  the  proper  per- 
son can  be  found. 

A  partnership  should  not  be  too  lightly  entered  into, 
nor  when  once  formed  dissolved  on  too  frivolous  grounds. 
If  it  does  not  give  promise  of  durability  when  enter- 
tained, it  is  best  not  to  form  one.  There  is  always  con- 
siderable waste  of  time  and  expense  in  settling  one  up,  as 
well  as  some  in  entering,  and  frequent  changes  will  add 
materially  to  the  cares  and  anxieties  of  the  life's  business, 
as  well  as  give  rise  to  unfavorable  rumors,  to  the  detri- 
ment of  the^'parties  and  the  injury  of  their  credit  in  busi- 
ness circles. 


Importance  of  a   WHtten  jigr cement,  291 

In  all  cases  of  copartnership,  whether  of  longer  or 
shorter  duration,  a  carefully  drawn  agreement  ought  to  be 
executed,  which  should  include  all  the  details  of  the 
method  and  plan  of  the  proposed  business,  and  the  capi- 
i  tal  and  service  each  partner  is  to  contribute,  and  especially 
the  manner  in  which  the  business  is  to  be  closed  up  and 
settled  at  the  end  of  the  partnership.  And  it  is  well  also 
to  include  a  prohibition  against  such  practices  or  course 
of  life  of  the  partners  as  would  injure  the  business  oi  the 
reputation  of  the  firm. 

The  necessity  for  such  an  agreement  is  particularly  im- 
pressed on  the  reader— first  because  the  inception  of  the 
idea  of  a  written  agreement  leads  to  reflection  upon  what  it 
ought  to  contain,  and  naturally  to  a  fuller  conference  be- 
tween the  parties  as  to  the  matters  connected  with  the 
partnership  and  business,  by  which  each  one  hears  some- 
thing more  of  the  expectations  and  wishes  of  the  other, 
than  he  probably  would  otherwise  ;  and  secondly,  so  that 
what  is  agreed  on  shall  be  legally  binding,  and  not  liable 
to  be  forgotten  afterward. 

Such  an  agreement  cannot  ordinarily  be  properly  drawn 
except  by  a  competent  lawyer ;  yet  the  parties  should  al- 
ways first  sit  down  together  and  make  a  rough  draft,  em- 
bodying  all  the  details  that  occur  to  them  as  desirable  to 
be  embraced,  so  that  the  lawyer  may  know  more  clearly 
what  they  wish  him  to  incorporate  in  the  agreement.  In 
this  way,  too,  they  are  more  likely,  with  the  addition  of 
the  lawyer's  advice,  if  he  is  a  man  of  experience  in  these 
matters,  to  get  all  the  details  which  ought  to  be  embraced 
in  such  an  instrument. 

In  cases  where  the  partnership  has  been  formed  with- 
out any  agreement  as  to  the  method  of  division  at  its  dis- 
solution, difficulty  is  sometimes  found  in  making  an  cqui- 
table  division  of  the  assets. 


or\o  dissolution  of  a  Copartnership, 

Ordinarily  the  partner  wishing  to  withdraw  from  the 
business  and  take  out  his  interest  in  cash,  has  to  make 
such  sacrifices  on  his  share  as  will  induce  the  continumg 
partner  to  buy  him  out,  and  it  is  a  mere  matter  of  bar- 
Lining  as  to  what  he  gets.  But  this  partner  may  not 
wish  to  dissolve  the  copartnership,  and  hence  declmes  to  . 
give  anything  near  a  fair  value  for  his  partner's  share. 
Indeed  'it  will  often  occur  that  the  continumg  partner 
has  not  means  sufficient  to  pay  cash,  and  the  one  that 
could  advance  his  pecuniary  interests  faster  in  some  other 
connection,  is  often  on  this  account  compelled  to  remam 
in  a  copartnership  which  is  unsatisfactory. 

When  a  person  wishes  to  withdraw  from  a  partnership, 
and  does  not  need  the  money,  he  may  sometimes  nego- 
tiate a  better  sale  of  his  interest  by  taking  the  obligations 
-of  the  continuing  partner,  payable  at  such  times  as  may 
be  mutually  agreed  on,  longer  or  shorter,  according  as  he 
is  getting  a  higher  or  lower  price  for  his  interest  or  ac- 
cordino-  to  his  own  future  necessities  for  money.  In  this 
way  the  continuing  partner  has  the  use  of  the  whole  cap- 
ital foi  a  time,  in  which  he  may  re-arrange  the  business 
on  a  basis  commensurate  with  his  own  means,  and  he  can 
on  this  account  often  aiford  to  give  much  more  for  the 

retiring  partner's  interest.  ;i    •    • 

When  such  an  aiTangement  cannot  be  effected,  it  is 
sometimes  possible  to  get  a  third  party  to  buy  out,  and 
take  the  place  of  the  retiring  partner.  Of  course  the 
third  party  must  be  satisfactory  as  a  partner  to  the  one 
'who  remains,  as  he  is  not  bound  to  accept  any  one.  Or- 
*dinarily;  however,  when  one  member  of  a  firm  has  made 
'up  his  mind  to  leave  it  at  the  first  opportunity,  he  does  not 
*ive  his  hSrt  to  the  business  afterward,  and  is  therefore 
not  lo^valuable  in  the  partnership  as  a  man  of  really  less 
ability  would  be,  who  is  anxious  to  embark  in  the  busmess. 


^^oviding  for  the  ZiabiUties, 


293 


Wheii  no  arrancrement  can  be  made  to  sell  out,  the  only 
resource  is  to  divide  the  assets  as  equitably  as  possible. 
In  doino-  tliis,  there  ouorht  first  to  be  set  aside  sufficient  of 
them  to  pay  off  the  indebtedness  of  the  firm,  if  any, 
taking  care  also  to  provide  for  existing  or  running  con- 
tracts, as  rent  of  store,  clerk  hire,  and  agreements  for  tlie 
purchase  of  goods  which  are  yet  to  be  delivered.  The 
best  assets  for  this  purpose,  after  the  cash  itself,  are  the 
accounts  owing  to  the  firm.  When  there  are  enough  of 
these  which  can  be  set  apart,  the  dissolution  is  much  sim- 
plified, as  they  are  easily  managed,  and  any  surplus  of 
them  left  after  paying  the  debts  of  the  firm,  can  be  di- 
vided without  trouble.  When  these  are  insufficient,  and  the 
money  has  to  be  realized  from  the  subsequent  sales  of 
goods,  there  will  be  more  difficulty  to  provide  for  the  debts. 
It  will  then  be  more  equitable  generally  for  each  partner  to 
take  his  proportion  of  the  goods,  and  furnish  afterward 
his  share  of  cash  towards  paying  the  firm's  debts  as  they 
become  due.  It  may  sometimes  be  desirable  that  each 
partner  in  taking  in  this  way  his  share  of  the  assets  under 
his  individual  control,  gives  some  security  to  the  other 
that  his  share  of  the  money  to  pay  the  indebtedness  will 
be  forthcoming  when  it  is  required. 

On  account  of  the  necessity  for  this  provision  for  the 
payment  of  the  debts  of  the  partnership,  it  is  always  ad- 
visable to  prepare  for  the  contemplated  dissolution  by 
selling  the  stock  and  paying  the  debts  off,  as  far  as  pos- 
sible. 

When  the  liabilities  are  thus  provided  for,  the  division 
of  the  balance  of  the  assets  can  be  made  in  various 
ways.  A  very  common  way  is  to  appraise  carefully  their 
value,  and  make  them  up  in  lots,  say  fifty  or  a  hun- 
dred, and  let  each  partner  select  alternately  from  them, 
choosing  such  as  he  likes  best  or  thinks  cheapest,  until 


m 


294 


7)iyisio7i  of  the  Assets. 


one  has  his  full  quantity,  when  the  other  takes  the  bal- 
ance.    Or,  if  it  be  tliought  too  much  trouble  to  so  care- 
fiilly  appraise  the  vahic  of  every  article,  as  it  would  be 
proper  to  do  in  dividing  in  this  way,  the  goods  can  be  in^ 
ventoried  at  cost,  or  at  such  reduced  price  as  may  be 
readily  lixcd  on  by  a  cursory  examination,  as  in  taking  ac- 
countof  stock  ordinarily,  and  then  made  up  into  lots  of 
a  convenient  size,  that  the  business  may  be  more  quickly 
dispatched ;  which  can  be  conveniently  done  by  taking 
a  page  or  a  part  of  the    inventory  as  one  lot.     Then 
the  partners  bid  on   each  lot,   taking   them  in   regular 
order  just  as  though  they  were  buying  from  third  par- 
ties, bidding  less  than  the  inventory  price,  or  more,  as 
their  judgment  may  dictate  ;  the  highest  bidder  being  the 
buyer  of °the  lot,  which  is  then  charged  to  his  account  at 
the  price  he  bid.     When  one  partner,  by  his  purchases  in 
this  way,  has  bought  his  share  of  the  stock,  the  other 
takes  the  balance— whatever  may  be  left— at  the  inven- 
tory price.     This  is  a  very  fair  way,  as  each  one  can  bid 
up  on  the  lots  he  likes  best,  but  it  requires  some  care  and 
consideration  as  to  the  position  on  the  inventory  of  the 
most  desirable  goods.     If,  as  is  often  the  case,  the  inven- 
tory is  commenced  with  the  leading  and  most  saleable 
articles,  and  the  end  of  it  has  a  lot  of  trashy  or  shop- 
worn goods,  which  though  taken  at  seemingly  low  prices 
are   unsaleable,  the  one  who  bids   up  so  as  to  first  get 
his  share,  will  generally  have  the  best  of  the  division. 
The  one  who  is  not  buying  his  full  share  of  the  lots,  needs 
always  to  keep  in  mind  that  he  may  have  to  take  the 
poorer  goods  at  the  end  of  the  inventory,  at  the  price 
marked,  to  make  up  his  proportion. 

When  the  business  is  one  of  a  mixed  character,  and  the 
dissolution  of  partnership  is  brought  about  that  the  busi- 
ness may  be  divided,  and  each  partner  continue  on  in 


II 


The  Seller* s  ^ule  for  Talumg, 


295 


separate  branches,  as  sometimes  will  be  the  case,  such  a 
method  of  dividing  will  not  be  appropriate.  As  each 
one  would  only  want  the  lots  of  goods  which  the  other  did 
not  want,  there  could  be  no  healthy  competition  in  the  bid- 
ding. Under  such  circumstances,  when  the  parties  can 
not  agree  as  to  the  fair  value  of  the  goods  that  each 
wishes  to  take,  it  is  best  to  have  them  appraised  by  a 
third  party. 

Necessarily  the  difficulty  of  making  a  division  of  the 
assets,  and  the  loss  which  may  be  sustained  by  a  partner 
who  wishes  to  withdraw  from  a  copartnership,  will  often 
overbalance  the  expected  advantage  of  another  business 
pursuit  in  which  the  withdrawing  partner  designs  embark- 
ing, and  he  will  thus  be  induced  to  prefer  remaining  in 
the  old  connexion.  Therefore  it  is  never  wise  or  prudent 
for  a  man  in  a  partnership  to  make  actual  engagements  in 
connection  with  a  new  business  until  he  knows  exactly 
how  he  is  to  withdraw  from  his  present  one :  and  such 
an  appraisement  of  the  goods  might  well  be  only  a  con- 
ditional step  to  withdrawal,  which  is  not  to  be  made  final 
and  conclusive  until  after  he  sees  the  rate  he  will  be 
charged  for  the  goods  he  is  to  take,  and  finds  all  the  con- 
ditions of  the  dissolution  satisfactory. 

The  natural  tendency  in  most  people  to  over-estimate 
the  value  of  any  property  they  hold,  or  in  which  they 
have  an  interest,  should  induce  caution  in  buying  out  a 
partner.  Of  the  instances  of  such  purchases  which  have 
come  under  the  writer's  notice,  in  the  large  majority  the 
error  has  been  on  the  side  of  giving  too  much.  The  cost 
of  the  goods,  though  most  frequently  the  basis  of  their 
estimated  value,  is  no  certain  criterion.  This  may  be 
called  the  seller's  rule  for  the  value;  it  can  rarely  ex- 
ceed this  sum,  and  may  be  much  less.  In  estimating  the 
value  of  any  article,  therefore,  the  cost  price  should  bo 


t 


^\ 


296 


TVie  buyer's  Ttule  for  yaluing. 


i 


% 


borne  in  mind,  subject  to  such  reduction  or  modification  as 
circumstances  render  necessary,  and  which  are  likely  to 
vary  with  every  separate  article. 

•  It  is  often  said  that  the  worth  of  an  article  is  what  it 
will  bring.  But  neither  is  this  always  a  correct  fule. 
This  may  be  called  the  buyer's  rule  for  valuing,  and  an 
article  is  rarely  worth  less  than  it  can  be  sold  for.  Still 
it  must  be  remembered  that  it  costs  something  even  to 
sell  the  article,  and  the  one  who  buys  to  sell  again  must 
live  by  the  sale,  and  hence  not  only  the  cost  of  selling, 
but  a  profit  must  also  sometimes  be  allowed  for.  For  in- 
stance, a  pair  of  shoes  may  have  cost  five  dollars  at  whole- 
sale, and  could  not  be  bought  for  less;  but  on  account 
of  being  shopworn  they  would  only  readily  bring  the  five 
dollars  at  retail.  A  fair  allowance  for  profit  from  this 
ought  therefore  to  be  made  in  estimating  their  value,  as 
between  partners,  and  if  such  shoes  ordinarily  sold  at  a 
dollar  a  pair  profit,  the  value  of  this  pair  would  be  really 
four  dollars  only. 

Nor  would  this  rule,  unless  modified,  on  the  other  side, 
always  do  full  justice  to  the  seller.  Particularly  in  such 
things  as  might  be  regarded  as  the  tools  of  the  trade — 
as  fixtures,  machinery,  etc.  A  platform  scale,  for  instance, 
for  weighing  coal  and  hay,  which  had  been  in  use  for 
two  or  three, years  only,  and  but  slightly  worn,  would  not 
probably  bring — if  to  be  removed — one-half  its  cost,  owing 
to  the  expense  of  resetting,  while  to  the  dealer  using  it,  it 
would  be  worth  possibly  within  twenty  per  cent  of  what 
it  cost ;  and  if  he  could  not  get  another  readily  to  replace 
it,  it  would  be  worth  to  him  often  even  more  than  it  cost, 
as  without  it  his  business  could  hardly  be  conducted. 

The  plan  for  estimating  the  value  of  such  partly  worn 
articles,  is  to  take  their  present  new  value  by  a  fair  com- 
parison with  other  and  more  improved  articles  of  the 


Valuing  Tartly  Worn  Articles. 


297 


kind,  if  any,  and  from  this  deduct  the  worth  of  the  ma- 
terials after  the  article  may  be  regarded  as  worn  out." 
The  balance  is  the  amount  which  is  to  be  sunk  through 
the  number  of  months  or  years  it  will  last.  To  properly 
divide  this  loss,  in  most  articles  a  liberal  allowance  must 
be  made  in  favor  of  the  last  half  of  the  period  of  wear, 
owing  to  the  increased  cost  ordinarily  for  repairs,  and  the 
less  perfect  working  of  the  article  in  the  later  period. 

A  grocer's  wagon,  for  instance,  might  fairly  be  regarded 
as  half  worn  out  whenever  by  actual  wear  some  part 
gave  way  and  required  to  be  renewed.  Though  on  a  cur- 
sory inspection  it  may  seem  nearly  as  good  as  new,  a 
certain  amount  of  wear  has  taken  place  in  all  its  parts, 
and  they  may  be  expected  to  give  way,  one  after  another 
requiring  frequent  repairs,  the  cost  of  which  alone  will 
go  far  to  balance  the  benefit  of  its  use.  So  that  the  last 
two  years  of  its  use  would  not  probably  be  so  advanta- 
geous to  enjoy  as  it  would  be  to  have  one  year's  wear  of 
it  when  new. 


/ 


II' 


CHAPTER    XX. 

INFLUBNCB  OF  SOCIAL  INTEECOUESE  ON  BUSINESS, 

WHILE  a  man  who  prudently  and  intelligently  pur- 
chases his  goods,  and  sells  them  at  reasonable  profits,  and 
ia  a  manner  pleasing  to  his  customers,  and  faithfully  at- 
tends to  his  business,  will  generally  succeed  in  making 
money,  it  is  noticeable  that  some  of  those  who  do  so  be- 
come more  popular  with  the  community,  have  a  larger 
circle  of  customers,  and  make  money  faster  than  others 
do,  who  are  equally  faithful  and  skillful  in  all  that  apper- 
tains strictly  to  the  business. 

^  This  success  is  sometimes  the  result  of  family  influence, 
the  one  having  a  large  circle  of  relatives  in  the  com- 
munity, who  are  interested  in  his  advancement,  and  not 
only  patronize  him  in  their  dealings,  but  use,  also,  their 
influence  over  their  acquaintances  in  his  favor,  while  the 
others  have  no  such  advantage. 

This  is  of  course  an  advantage  which  one  man  is  born 
to,  and  another  not,  but  there  are  many  favorable  influ- 
ences in  social  life  which  can  be  honorably  subordinated 
to  a  dealer's  interest,  if  he  gives  the  subject  the  attention 
it  deserves.  Inattention  to  them  will  not  especially  endan- 
ger his  prosperity,  but  it  may  seriously  retard  it,  and  com- 
pel him  to  labor  a  life  time  for  the  same  reward  which  with 
their  favor  he  could  obtain  in  comparatively  a  few  years. 

In  business,  the  next  best  thing  to  having  many  friends, 
is  having  many  acquaintances.  The  first  arc  hardly  Avon 
by  years  of  honesty  and  integrity,  but  the  latter  are  the 
daily  rewards  of  a  courteous  and  afi*able  demeanor. 


£Jnlarging  the  Circle  of  Acgualnla?ices,        299 

We  employ  our  physician  and  lawyer,  deal  with  our 
baker,  butcher,  coal-man,  grocer,  druggist,  smith,  shoe- 
maker, tailor,  etc.,  not  half  the  time  because  they  are 
the  best  of  their  kind,  but  simply  because  we  are  ac- 
quainted with  them.  They  go  to  our  church,  belong  to 
our  society,  lodge,  or  company,  or  we  meet  them  socially 
at  the  houses  of  our  acquaintances,  and  when  we  need  any 
thing  in  their  vocation,  our  thoughts  revert  naturally  to 
them,  as  able  to  supply  our  want.  And  it  is  besides  pleas- 
anter  to  deal  with  those  with  whom  we  are  acquainted. 

It  should,  therefore,  be  the  aim  of  a  retailer  to  enlarge 
and  extend  his  circle  of  acquaintance  among  those  who 
are  so  situated  in  life  as  to  be  customers  to  him ;  as  far,  at 
least,  as  he  can  without  taking  too  much  time  from  his 
actual  business.  He  should  not  become  so  tied  down  to 
the  details  of  his  business  as  to  feel  that  an  hour  or  an 
evening  taken  occasionally  to  attend  to  social  interests  is 
entirely  lost  to  him.  On  the  contrary,  he  should  feel  a 
citizen's  interest  in  all  the  moral,  intellectual  and  benevo- 
lent enterprises  and  associations  of  his  neighborhood,  and 
take  part  in  them.  I  do  not  mean  to  inculcate  the  duty  of 
doing  this  as  a  business  expedient,  or  that  he  should  thus 
go  among  his  fellow  men,  as  it  were,  drumming  for  pat- 
ronage. Nothing  is  more  odious  than  to  see  a  person  in 
social  gatherings  soliciting  custom.  He  should  pursue 
such  a  course,  simply  as  he  would  be  honest  in  his  deal- 
ings, not  because  it  is  the  best  policy,  but  because  it  is 
right.  The  influence  of  an  intelligent,  upright  business 
man  in  a  community  ought  to  be  beneficial,  and  it  is  his 
duty  to  extend  such  an  influence  in  all  legitimate  and  pro- 
per ways,  not  looking  to  any  reward  which  may  be  made 
to  him  therefor,  or  thinking  that  he  earns  any  thereby,' 
but  at  the  same  time  receiving  the  compensation  as  the 
result  of  an  acquaintance  originated  from  other  motives. 


:*t 


X 


300 


Membership  in  Associations, 


The  Zeadhif/  Store  in  the  ^ace. 


301 


It  is  not  necessary  that  a  retailer  who  thus  connects 
himself  actively  with  associations  in  the  community,  should 
take  upon  himself  duties  in  official  positions  in  them 
which  greatly  take  up  his  time  or  interfere  with  his  at- 
tention to  business.  He  can  be  content  with  minor  offices 
which  will  give  him  opportunities  to  be  useful,  as  well  as 
bring  him  in  personal  contact  with  the  members  of  the 
association.  Thus  the  office  of  treasurer  is  preferable  to 
that  of  president  or  secretary  ;  in  a  military  corps  that  of 
major  or  lieutenant  rather  than  of  colonel  or  captain. 
Such  subordinate  positions  ordinarily  have  less  arduous 
duties,  and  therefore  do  not  make  such  serious  demands 
upon  the  attention  due  to  the  business ;  nor  are  they  so 
likely  to  excite  the  envy  of  the  dealer's  associates. 

There  are  in  every  community  more  or  less  of  associa- 
tions in  which  a  person  may  take  part,  or  not,  as  his  in- 
terest dictates.  There  are  no  moral  obligations  involved 
either  way.  In  such  as  these  a  dealer  can  properly  con- 
sider the  popularity  of  the  association.  In  a  Quaker  com- 
munity, membership  in  a  military  company  would  not 
add  much  to  a  dealer's  influence ;  and  more  may  be  lost 
than  gained  in  this  association  in  any  locality,  unless 
great  caution  is  exercised  in  keeping  the  expenditure 
therein,  of  time  and  money,  within  due  bounds. 

Neither  can  political  associations  be  greatly  recom- 
mended as  productive  of  increased  gain  to  a  man's  busi- 
ness. While  it  is  incumbent  on  every  man  in  a  republi- 
can government  to  vote,  and  to  make  no  secret  of  the  na- 
ture and  character  of  the  ticket  he  intends  to  vote,  and 
be  ever  ready  in  a  modest  way  to  give  a  reason  for  his 
political  views,  it  is  very  bad  policy  for  a  retailer  to  turn 
his  storehouse  into  a  political  club  room,  and  have  it 
known  as  the  headquarters  of  this  or  that  party  or  clique. 
While  party  feeling  runs  so  high,  he  caja  only  expect  to 


make  enemies  of  those  opposed  to  him  politically,  while 
many  of  his  own  side  will  be  jealous  of  his  position 
and  influence  in  the  party,  and  will  be  only  lukewarm 
friends  at  best.  Ready  to  say — when,  on  account  of  neg- 
lecting liis  business,  his  trade  is  broken  up — "  poor  fel- 
low, he  would  have  done  well  enough  if  he  had  only 
let  politics  alone,"  but  at  the  same  time  quite  well  satis- 
fied to  see  him  out  of  the  way  of  their  ambition. 

It  is  always  an  advantageous  position  for  a  dealer,  to 
be  considered  by  the  community  as  having  the  leading 
store  in  the  place  in  which  he  is. 

Usually  this  honor  is  accorded  to  the  one  that  has  the 
largest  and  most  varied  stock  of  goods,  and  who  does  the 
largest  business.  But  it  sometimes  happens  thac  a  dealer 
doing  a  smaller  business,  by  careful  attention  in  selecting 
choice  styles  of  goods,  and  being  the  first  to  introduce 
new  designs,  obtains  a  higher  reputation  as  a  leader,  and 
gathers  around  him  a  class  of  customers  who  are  leaders 
of  the  fashions  and  opinion  in  the  community ;  and  by 
his  courteous  manner  of  dealing,  and  possibly  his  deserved 
social  standing  in  the  community,  earns  for  his  store  the 
reputation  of  being  the  leading  one,  though  there  may  be 
others  that  do  a  much  larger  business  than  he  does.  There 
must,  however,  be  a  spirit  of  popularity  in  such  a  busi- 
ness— it  must  be  a  growing  one — and  seem  to  be  moving 
onward  to  a  higher  position,  in  point  of  magnitude  of 
sales,  than  those  around  it,  or  it  will  only  be  patronized 
by  the  select  few,  and  will  fail  to  receive  the  sympathy  and 
patronage  of  the  great  body  of  the  people.  We  all  like 
to  take  the  coming  man  by  the  hand,  that  we  may  say 
in  after  years,  we  appreciated  him  before  the  world  found 
out  his  merits.  So  we  like  to  deal  with  those  that  we 
think  will  by  and  by  be  great  men  in  their  vocations.  In 
future  years  when  Mr,  A.  has  grown  to  be  a  millionaire,  and 


\ 


302  Injurious  Social  Influences, 

in  a  magnificent  five  story  marble  front  store,  we  shall 
be  happy  to  remind  him  that  "  we  were  among  his  custom- 
erswhen  he  kept  store  in  the  little  dingy  brick  around 
the  corner,"  and  shall  expect  then  to  have  greater  affa- 
bility and  better  bargains  from  him. 

It  is  of  importance  for  a  retaUer  to  take  some  trouble 
to  accommodate  and  conciliate  the  leading  people  in  the 
community— those  who  to  some  extent  give  tone  and 
color  to  the  prevailing  opinions.  These  are  not  by  any 
means  always  the  most  wealthy  people,  as  is  quite  gener- 
ally supposed.  They  are  the  talkers— the  visitors  around 
—a  half  dozen  of  whom  may  easily  make  or  mar  the 
reputation  of  a  dealer  as  they  speak  well  or  ill  of  him. 
Generally  it  is  not  hard,  in  small  towns  especially,  to  se- 
lect out  this  dozen  or  two  of  the  community,  and  by  spe- 
cial attention  to  treating  them  liberally  keep  them  on  the 

dealer's  side. 

There  are  some  injurious  influences  arising  from  social 
intercourse,  which  it  is  necessary  to  guard  against. 

One  is   the  tendency  to  form   cliques    and  caucuses 
among  those  who  assemble  from  time  to  time  around  a 
dealer's  store,  as  referred  to  a  page  or  two  back  in  refer, 
ence  to  political  matters.    But  it  is  not  always  confined 
to  politics.    Men  of  the  same  sentiments  in  any  associa- 
tion, naturally  delight  to  get  together  and  talk  over  their 
views,  and  arrange  plans  to  carry  them  out  in  the  regular 
meetings  afterwards.    A  retailer  may  often  be  led  by  a 
few  sut'h  to  take  sides  with  them,  and  they  meet  at  his 
place  of  business  to  consider   and   arrange  their   plans. 
The  first  thing  the  opponents  of  these  particular  views 
know  about  the  movement,  is  that  it  is  sprung  upon  them 
at  one  of  the  regular  meetings  of  the  association,  and  car- 
ried  throu'rii  before  the  objectors  have  time  to  organize 
an  opposition.     Subsequently  those  opposed  condemn  the 


3>anger  of  Mgtecting  the  business. 


603 


action  as  the  work  of  a  clique  around 's  store ;  and 

the  proprietor  comes  in  for  the  largest  share  of  their  ani- 
madversion, though  possibly  he  had  but  little  to  say  in 
the  matter,  merely  giving  it  his  countenance.  It  would 
be  better  for  the  retailer,  if  his  particular  friends  in  the 
matter  felt  that  he  could  not  be  trusted  to  second 
any  underhanded  attempt  to  carry  out  their  peculiar  ideas, 
and  should  therefore  refrain  from  canvassing  the  matter  at 
his  store,  or  in  his  presence ;  or  if  they  did  not,  that  instead 
of  countenancing  their  projects,  he  should  take  good  care 
to  condemn  all  such  secret  plotting,  as  at  least  discredit- 
able, if  not  dishonorable. 

Another  danger  arising  from  social  intercourse,  is  the 
tendency  which  the  diversions  and  duties  thereof  have  in 
causing  a  neglect  of  the  dealer's  business.  It  is  some- 
what difficult  for  a  person— no  matter  how  strong  his 
resolution— to  take  a  hearty  interest  in  the  opera- 
tions of  any  association,  which  in  its  details  requires 
the  time  of  some  of  its  members,  without  gradually  yield- 
ing to  the  occasion  and  allowing  such  demands  to  absorb 
more  of  his  business  hours  than  is  profitable.  That  some 
time  is  necessary  to  be  given  is  admitted ;  exactly  how 
much  must  be  the  consideration  of  the  individual,  in  view 
of  the  circumstances  of  his  position.  Whatever  he  may, 
on  full  view  of  the  matter,  decide  as  proper,  and  within 
his  ability  without  risk  of  neglecting  his  business,  to  so 
much  he  should  restrict  himself,  whether  one  hour  in  the 
week,  or  one  hour  each  day — taken  at  the  most  favorable 
period.  Instances  are  frequent  where  retailers  are  drawn 
into  one  association  after  another,  becoming  president  of 
this,  secretary  of  the  next,  and  treasurer  of  another — pos- 
sibly director  in  a  fourth— so  that  fully  one-half  their  time 
is  taken  up  with  these  matters,  to  the  manifest  mjury  of 
their  business.  . 


■\ 


304 


Opjposinff  Social  Extravagance, 


\ 


Another  danorer  from  social  influences,  is  their  tendency 
to  so  bind  a  man  to  a  locality  that  he  is  miwilling  to  leave 
it  when  such  changes  occur  decreasing  the  population,  or 
increasing  the  rival  stores,  as  to  make  it  of  great  advan- 
tage to  him  pecuniarily  to  seek  another  location  for  his 
business. 

One  of  the  principal  reasons  why  people  of  foreign 
birth  are  so  often  more  successful  in  business  than  the  na- 
tive born,  is  their  indisposition  to  remain  long  in  any 
place  after  their  trade  becomes  unprofitable.  Strangers 
alike  in  all  places,  all  are  alike  agreeable,  or  disagreeable, 
socially,  and  there  are  no  strong  friendly  ties  to  be  rup- 
tured when  interest  prompts  a  removal. 

Society  exerts  a  great  influence  on  a  dealer's  ambition 
— sometimes,  no  doubt,  beneficial  in  inciting  those  to 
efforts,  who  without  the  influence  would  be  indisposed 
to  strive — but  too  often  the  influence  is  pernicious.  A 
man  who  starts  in  life  in  a  modest  way,  aiming  to  make 
only  a  certain  reasonable  amount,  after  which  he  purposes 
retiring,  and  giving  place  to  others  more  needy,  often 
finds  that  the  tinsel  and  frippery  of  fashionable  society, 
and  the  love  of  display,  have  so  invaded  his  home,  and 
too  often  his  own  heart,  that  he  is  under  the  necessity  of 
continuing  on  in  business  long  after  he  has  reached  the 
goal  he  originally  started  for.  So  powerful  are  these  in- 
fluences that  men  are  often  allured  by  them  to  all  sorts  of 
dishonesty,  and  become  swindlers  and  rogues,  to  obtain 
means  to  satisfv  their  insatiable  and  mischievous  desire 
for  ostentatious  display. 

The  retail  dealers  throughout  the  country  can  do  much 
to  keep  in  clieck  this  national  sin  of  extravagance,  by  a 
prudent  and  unostentatious  style  of  living  themselves, 
and  by  their  example  and  advice  discourage  it  in  others. 
In  rural  communities  the  retailer  generally  holds  such  a 


> 


The  Dealer's  Influence  on  Society,  305 

position  that  he  has  a  large  influence  in  this  matter  on 
those  around  him.  Too  often,  unfortunately,  it  is  so  used 
as  to  lead  the  community  to  greater  extravagance. 

As  in  any  given  locality,  the  morals  of  the  people  will 
be  mainly  a  reflection  of  the  character  and  iliithfulness  of 
the  clergy ;  their  health  of  the  wisdom  and  skill  of  the 
physicians ;  their  domestic  comforts  of  the  industry  and 
thrift  of  the  producers ;  so  will  their  responsibility  and 
promptness  in  pecuniary  matters  depend  very  much  on 
the  business  character  and  habits  of  the  traders  among 
them.     If  they  inculcate  the  duty  of  exactness  and  prompt- 
ness  in  fulfilling   all  contracts  and  promises,  no  matter 
how   triflmg,   and  uniformly  manage  their  business   on 
these  principles,  not  only  strictly  carrying  them  out  in 
their   own   obligations,   but   strictly   requiring   them   of 
others,  they  will  keep  alive  and  active  that  high  sense  of 
honor  in  the  community,  which  induces  a  man  to  consider 
his  word  as  obligatory  as  his  bond. 

All  that  is  necessary,  beyond  their  own  example  is  the 
general  commendation  of  those  who  conscientiously  and 
faithfully  fulfill  their  promises,  and  an  extension  to  them 
of  a  higher  degree  of  honor  and  respect,  no  matter  what 
may  be  their  comparative  social  position  in  the  commu- 
nity ;  and  as  general  a  censure  of  all  that  neglect  such 
duties,  and  a  withdrawal  of  confidence  to  a  greater  or  less 
extent,  according  to  the  demerits  of  the  case. 

Too  often  a  customer,  who  by  his  actions,  has  repeat- 
edly shown  that  he  feels  no  conscientious  obligation  to 
pay  his  debts  at  maturity,  or  within  any  reasonable  time 
thereafter— and  postpones  payment  until  the  money  is 
fairly  worried  out  of  him  by  dunning,'  at  an  expense  of 
time  and  thought,  quite  sufficient,  if  differently  directed, 
to  earn  the  amount  of  the  debt,  will  be  immediately  en- 


306 


Zenity  in  defaults. 


treated,  on  the  payment  of  the  debt,  because  *he  is  known 
to  be  wealthy,  to  renew  the  account  by  the  purchase  of 
other  goods  on  credit ;  receiving  in  all  respects  as  affable 
and  generous  treatment  as  if  he  had  paid  honorably  and 
punctually  according  to  his  promise. 

When  men  in  the  community  who  are  well  able  to  pay, 
are  treated  with  so  much  lenity  in  their  defaults,  it  is  not 
strange  that  those  less  able  should  think  that  there  is  but 
little  honor  or  respect  gained  by  promptness  in  meeting 
their  obligations,  and  so  gradually  declme  from  their 
ideal  standard  of  moral  rectitude. 

If  the  dealers  in  any  given  locality  would  have  the  in- 
dependence to  adopt  and  practice  the  course  suggested, 
they  would  soon  find  it  a  pleasure  to  do  business,  instead 
of  a  continual  toil  and  exasperation,  as  it  generally  is 
when  the  dealer,  having  lax  ideas  on  this  important  duty, 
virtually  teaches  the  community  to  disregard  these  obli- 
gations, or  to  yield  only  a  tardy  and  grumbling  compli- 
ance when  urged  again  and  again. 


CHAPTER   XXI. 

ON  BUYING   GOODS   AT  AUCTION. 

THE  plan  of  selling  dry  goods  at  wholesale  by  auc- 
tion seems  yearly  to  increase  in  favor,  and  no  retailer  of 
this  kind  of  goods,  whose  business  is  of  any  extent,  can 
expect  to  cope  with  the  competition  he  will  inevitably 
meet,  who  does  not  to  some  extent  adopt  this  plan  of 
purchasing.  Like  many  other  things,  it  may  be  done  to 
excess,  and  probably  he  who  buys  the  half  of  his  goods 
at  auction,  will  be  about  as  badly  off  as  he  wlio  never 
buys  any  there.  Though  he  may  have  his  stock  of  goods 
cheap  enough,  he  will  have  a  great  many  articles  not 
adapted  to  his  trade.  As  auxiliary,  though,  to  private 
purchases  the  auction  room  offers  great  advantages. 

Originally  this  plan  of  selling  goods  was  onl}^  availed 
of  in  times  of  great  mercantile  distress,  to  raise  money, 
or  near  the  end  of  the  season  to  close  out  certain  kinds 
of  goods,  which  in  another  year  might  be  out  of  fashion, 
or  for  the  sale  of  antiquated,  imperfect  or  other  undesir- 
able goods  which  the  wholesale  dealer  either  would  not, 
or  could  not  sell  to  his  regular  customers.  And  it  was  then, 
as  a  general  thing,  only  at  the  periods  of  the  year  when 
the  retailer  was  more  anxious  to  sell  than  to  buy,  that 
really  desirable  goods  could  be  obtained  in  the  auction 
room.  But  within  the  last  thirty  years  this  has  mate- 
rially changed,  in  New  York  city  at  least.  And  while 
the  same  circumstances  as  before  still  continue  to  furnish 
goods  for  the  auction  room,  other  influences  induce  many 
importers  and  manufacturers  to  sell  their  desirable  goods 


308 


jLnecdote  of  an  Inexperienced  !Buyer, 


in  this  way,  at  the  time  of  year  when  they  arc  most  in 
demand.  And  tliat  retailer  must  have  a  very  fastidious 
set  of  customers  indeed,  who  can  not  every  week  in  the 
season  find  in  the  auction  room  such  goods  as  will  suit 
his  trade.  The  main  consideration  will  be,  therefore, 
the  ability  to  buy  them  at  right  prices. 

There  is  a  great  deal  of  art  in  buying  goods  in  the  auc- 
tion room,  doubtful  though  it  may  seem  when  "the 
highest  bidder  is^the  buyer,"  but  it  only  needs  a  visit  or 
two  there  to  see  that  experienced  buyers  often  succeed  in 
obtaining  a  lot  of  goods  out  of  a  line  at  a  price  five  or 
ten  per  cent  less  than  others  pay. 

As  most  of  my  readers  probably  know,  goods  are  fre- 
quently put  up  in  the  auction  room  in  "  lines  "  of  four  to 
six,  or  more  lots,  each  lot  alike  or  nearly  so,  the  line  be- 
ing the  contents  of  one  case  of  goods,  and  there  is  but 
little  difference  often  in  the  various  lots  in  the  line.  A 
retailer  in  a  distant  town,  not  much  accustomed  to  buying 
in  the  auction  room,  remarked  to  the  writer,  one  day 
after  the  purchase  of  several  lots  of  goods  in  such  an  auc- 
tion sale,  "  These  auctions  are  queer  places  to  buy  goods 
in.  Whenever  I  buy  the  first  lot  in  the  line,  to  make  sure 
of  having  one,  the  price  always  falls  off  on  the  other  lots, 
and  when  I  let  the  first  lots  go,  and  buy  towards  the  end 
of  the  line,  I  have  to  pay  an  advance.  I  don't  under- 
stand it."  Yet  naturally  this  is  the  result  when  no 
shrewdness  is  exercised.  If  even  one  buyer  withholds 
his  competitive  bid  the  price  recedes,  and  when  he  comes 
in  again  the  price  advances. 

Inexperienced  buyers  often  pay  in  this  way  higher 
prices,  from  too  readily  concluding  that  the  price  at  which 
they  buy  is  the  lowest  the  goods  will  be  sold  for,  simply 
because  it  is  lower  than  they  have  been  asked  for  th^ 
goods  at  private   sale.    But  the  shrewd  business  man 


Requisites  of  an  Auctioti  Sttyer, 


309 


will  never  be  satisfied  that  he  has  bought  an  article  cheap 
enough  if  another  buys  it  lower  an  hour  or  two  after- 
ward. 

To  make  a  good  buyer  at  auction,  it  requires  several 

things  ;  among  them  are : 

1st.  A  knowledge  of  the  relative  values  of  different 
qualities  of  goods,  and  in  this  to  be  able  to  decide  when 
there  is  no  real  difference  in  quality ;  so  as  not  to  be  mis- 
led by  catalogue  descriptions  of  "finer,"  "  superior,"  "ex- 
tra," etc.,  applied  to  a  series  of  lots  of  similar  goods,  the 
quality  of  some  of  which  does  not  vary,  while  of  others 

it  may. 

2d.  A  knowledge  of  the  prices  at  which  the  goods 
have  sold  at  previous  sales,  and  their  price  at  private 
sales,  so  that  more  is  not  paid  for  them  than  they  can  be 
bought  at  in  private. 

3d.  Good  judgment  as  to  how  prices  will  tend  for  the 
day,  or  arc  generally  tending,  whether  upward  or  down- 
ward, and  how  much  either  way— as  governed  by  late- 
ness of  tlie  season,  general  dullness  or  activity  of  trade ; 
and  sometimes  by  circumstances  connected  with  the  day 
and  location  of  the  sale,  which  keeps  back. buyers,  or 
brings  them  out  in  larger  numbers  than  usual. 

4.  A  well-timed  promptness  and  energy  in  bidding  at 
the  right  moment— neither  so  eager  as  to  unduly  run  up 
the  price,  nor  so  dull  and  slow  as  to  fail  of  getting  such 
lots  as  are  wanted,  except  by  paying  an  extra  price  for 

them. 

5.  Such  repression  of  feeling,  that  no  visible  manifest- 
ation is  made  of  the  desire  to  buy  any  special  lot  or  style 

of  goods. 

None  of  these  are  difficult  for  any  ordinary  business 
man  to  attain.  They  are  indeed  required  to  some  extent 
in  buying  in  private,  though  the  exact  knowledge  of  the 


310 


The  Auction  ^rice. 


n 


ll|i: 


price  of  goods  is  not  so  essential  in  buying  of  a  reputable 
house  in  private,  as  the  seller  there  makes  the  price,  and 
if  too  liigh  he  is  liable  to  reproach  afterward,  and  often 
has  to  make  a  reduction  to  retain  his  customer,  while  in 
the  auction  room  the  buyer  makes  his  own  price,  and  has 
no  one  to  blame  if  he  makes  it  too  high ;  as  it  is  the  auc- 
tioneer's duty  to  get  the  best  price  he  can  for  the  owner, 
and  ignorant  buyers  bidding  against  each  other  will 
often  run  the  price  of  a  lot  of  goods  up  ten  or  twenty 
per  cent  above  private  sale  prices.  The  buyer  at  private 
sale  ought  indeed  also  to  know  what  the  goods  have  sold 
at  in  auction,  even  although  he  may  not  be  able  to  buy 
them  there  at  that  time ;  as  they  may  be  in  the  hands  of 
his  rivals  at  such  prices  that  they  can  afford  to  sell  them 
cheaper  than  he  can  now  buy  them. 

In  making  an  estimate  of  the  price  or  value  of  any 
specific  lot  of  goods  in  an  auction  room,  while  the  buyer 
ouo-lit  to  know  the  private  sale  price  so  as  not  to  bid  over 
that,  yet  it  is  not  safe  to  be  too  much  governed  by  it,  and 
decide  that  the  goods  are  cheap  simply  because  they  are 
even  much  below  that  price.  The  private  sale  price  is 
generally  based  on  the  cost  of  manufacture  alone,  while 
the  auction  price  is  based  on  the  customer's  appreciation 
of  the  goods  m  comparison  with  other  goods  of  like  char- 
acter of  different  manufacture.  One  man  may  not  have 
the  facilities  another  has  for  manufacturing  cheaply,  and 
his  goods  are  rated  ten  per  cent  higher,  though  really 
no  better  in  the  eyes  of  the  consumer.  Claiming  that 
they  are  brighter  in  color,  smoother  in  finish  or  more 
durable,  he  may  succeed  in  selling  enough  of  them  at  the 
ten  per  cent  higher  price,  to  establish  for  them  a  sort  of 
standard  price  at  private  sale,  but  they  would  not  be 
cheap  to  buy  in  auction  at  ten  per  cent  reduction.  Again, 
an  importer  will  order  a  dozen  different  styles  of  goods 


P^luctuations  in  Trices, 


311 


from  a  European  manufacturer,  all  at  the  same  cost.    He 
holds  them  all  at  the  same  price,  and  may  sell  eight  of 
them  out  at  private  sale.    The  other  four  being  inferior 
in  color  or  style  do  not  sell,  and  are  sent  to  the  auction 
room.     They  may  not  be  so  cheap  at  twenty-five  per  cent 
reduction  as  the  choicer  styles  were  at  the  full  price.  New 
styles  of  goods  are  often  sent  out  from  the  other  side  of 
the  Atlantic  to  try  the  market;  they  do  not  suit  the  taste 
of  the  community,  or  perhaps  better  goods  are  made  here 
at  home  at  less  than  they  cost,  but  they  will  be  held,  some- 
times for  months,  at  private  sale,  at  an  enormously  high 
price,  and  when  at  last  they  are  turned  over  to  the  auc- 
tioneer by  order  of  their  owner,  they  often  prove  a  losing 
speculation  to  the  buyer,  who  concluded  that  they  must 
be  cheap,  because  he  bought  them  so  much  less  than  the 
private  sale  price. 

The  prices  of  goods  generally  decline  as  the  period  of 
the  year  passes  by  in  which  they  are  in  demand,  and 
though  this  reduction  takes  place  in  private  sales  as  well 
as  in  public  ones,  it  is  noticeable  that  the  public  sales 
generally  lead  the  decline.  A  temporary  dullness  in  trade 
at  private  sale  is  one  of  the  chief  inducements  for  put- 
ting desirable  goods  in  auction.  The  wholesale  dealer  or 
importer  is  disinclined  to  make  such  reductions  in  price 
as  are  demanded,  and  the  result  is  a  lull  in  business  till  a 
trial  is  had  at  another  public  sale,  and  the  old  standard 
of  prices  thereby  sustained  or  a  new  one  formed.  Some- 
times after  goods  have  been  sold  very  low  early  in  the 
season  at  auction,  and  the  wholesale  dealers  seem  to  have 
conformed  to  the  low  price  in  their  private  sales  for  a 
time,  business  becomes  so  good  that  an  effort  is  made  to 
advance  prices,  and  the  auction  test  being  again  applied, 
it  is  found  that  they  bring  higher  prices.  These  fluctua- 
tions in  price  will  sometimes  be  from  ten  to  fifteen  per 


.1 


812 


Marking  the  Catalogue* 


cent  during  the  season,  without  the  goods  being  specially 
lower  in  price  at  the  end  of  the  season. 

Again,  sales  will  take  place  on  days  when  buyers  are 
very  busy  at  home ;  or  when  *  the  weather  is  inclement, 
and  they  would  not  freely  come  from  a  distance  ;  or  there 
may  be  other  sales  of  somewhat  similar  goods  going  on 
the  same  day,  so  much  more  important  as  to  draw  away 
buyers  ;  or  recent  heavy  sales  of  the  same  kind  of  goods 
where  many  were  fully  supplied  with  them,  and  will  not  be 
buyers  now ;  any  of  which  circumstances  may  have  an 
influence  on  the  prices  for  the  day  alone.  All  these  mat- 
ters require  to  be  well  weighed  before  this  estimate  of 
the  price  can  be  properly  made. 

The  practical  part  of  the  work  is  of  the  utmost  import- 
ance. The  catalogue  should  always  be  carefully  marked 
beforehand,  and  no  one  not  well  acquainted  with  the 
work  should  undertake  to  buy  goods  in  auction  on 
the  spur  of  momentary  excitement,  or  without  having 
previously  made  a  thorough  examination  of  the  goods  and 
carefully  marked  his  catalogue.  This  should  be  done  at 
an  early  hour  of  the  day  before  the  sale  commences,  or 
at  least  before  it  reaches  the  lines  of  goods  that  are  de- 
sired, as  it  is  no  time  to  make  a  proper  examination  of 
them  surrounded  with  the  noise  and  excitement  of  sell- 
ing. In  marking  the  catalogue,  special  care  is  always 
needed  to  compare  the  number  on  the  lot  of  goods  in- 
tended to  be  marked  with  the  catalogue  number,  as 
through  the  many  handlings  which  the  goods  'receive 
from  the  different  buyers,  they  are  often  misplaced  in  the 
line,  and  mistakes  occur  in  this  way,  the  buyer  marking 
on  the  catalogue  an  entirely  different  lot  from  that  he 
looked  at. 

As  it  is  one  of  the  ordinary  auction  rules  that  "  widths, 
sizes  and  descriptions  of  goods  are  not  warranted,"  it  is 


li 


Marking  the  Outside  'Price, 


313 


well  in  these  examinations  to  correct  the  catalogue  in  the 
more  important  particulars  ;  such  as  where  goods  are  cat- 
alogued as  thirty-six  inches  wide,  which  are  only  thirty 
inches  ;  or  called  six-fourths  when  only  three-fourths ;  or 
when  in  lines  of  goods  the  description  on  the  catalogue 
indicates  by  such  terms  as  "  finer,"  "  superior,"  "  better," 
etc.,  that  each  succeeding  lot  of  the  goods  increases  in 
value,   when   there  is   no    real   difference.    When  such 
errors  as  these  are  left  unnoted,  there  is  a  tendency  some- 
times, when  the  moment  comes  for  buying,  to  suppose  that 
a  mistake  has  been  made  in  marking,  and  the  buyer  loses 
confidence  in  his  own  ratings.  The  extreme  or  very  highest 
price  which  the  buyer  will  pay  for  the  goods,  is  the  one 
that  should  be  marked,  and  not,  as  is  often  the  case,  some 
very  low   price,  at  which  it  is  hoped  the  goods  can  be 
bought  for.     It  does   not  follow  because  the  full  price  is 
marked   on  the   catalogue  that  the  goods   shall  not  be 
bought   as  low   as  they   can  be,  while  if  a  low  price  is 
marked,  and  the  buyer  allows  himself  to  go  beyond  it, 
he  has  no  limit,  and  very  often  in  the  excitement  pays 
more  than  is  proper  for  his  goods.     Besides,  goods  always 
seem  cheaper  when  in  store  that  have  been  bought  under 
than  over  the  mark.     When  the  buyer  determinedly  ad- 
heres to  the  prices  he  has  marked  on  his  catalogue,  and 
will  not  go  beyond  them,  (as  he  ought  not  to,  except  in 
very  extreme  cases,)  if  he  has  marked  his  catalogue  too 
low,  he  shuts  himself  out  from  purchasing  the  lots  which 
are  most  desirable  for  his  trade,  or  which  please  him  best, 
by  thus  marking  them ;  and  feeling  the  necessity  of  buy- 
ing something,  he  will  take  a  lot  here  and  there,  which 
he  did  not  mark  nor  carefully  examine,  on  the  strength  of 
some  other  person's  purchases,  but  which  are  really  just 
as  high  in  price  as  the  more  desirable  lots,  which  he  failed 

to  get  from  marking  them  too  low. 

27 


-314 


Choice  of  Lots. 


Intimacy  ivith  the  Auctioneer » 


315 


il 


lit: 

I 


It  is  very  unsafe  for  a  retailer  to  buy  on  the  strength  of 
another  person's  purchase  in  the  auction  room,  even 
though  he  may  know  the  person  to  be  a  good  judge  of  the 
vahie  of  the  goods.  The  purchaser  may  have  an  interest 
in  running  up  the  goods.  Besides,  each  dealer's  cus- 
tomers, to  some  extent,  differ,  and  what  would  be  de- 
sirable for  one  to  purchase  might  not  be  for  another. 
When  the  buyer  does  not  feel  fully  satisfied  with  his  own 
conclusions  as  to  price,  and  that  will  often  be  the  case,  it 
is  a  good  plan  to  mark  two  prices — at  least  on  those  lots 
of  goods  which  he  especially  desires— one  which  he  re- 
gards as  the  fair  value  of  the  goods,  according  to  the 
then  circumstances  of  the  trade,  and  the  other  the  utmost 
that  under  any  circumstances  he  will  give  for  them.  Then 
when  he  bids  up  to  the  lower  price,  he  can  sufier  the  ten- 
dencies of  the  day's  sale,  and  the  extent  of  his  previous 
purchases  therein,  to  govern  him  about  going  up  to  the 
higher  price. 

In  buying  fancy-colored  dry  goods,  there  are  often  cer- 
tain colors  which  make  one  or  more  lots  out  of  the  case 
more  desirable  for  the  buyer's  trade.  As  the  choice  of  lots 
is  offered  in  the  line  comprising  the  case,  some  little  man- 
agement is  necessary  to  get  the  desired  lots  without  pay- 
ing an  extra  price  for  the  first  selection.  If  the  colors 
desired  are  those  generally  sought  after,  and  there  is  but 
one  lot  in  the  line  containing  the  color,  there  is  no  other 
way  but  to  bid  up  and  get  the  first  choice.  But  it  often 
will  happen  that  the  special  colors  wanted  are  not  those 
most  in  demand,  and  in  such  circumstances  it  would  be  un- 
wise to  bid  up  for  the  first  choice.  For  example,  suppose 
that  in  a  case  of  French  merinos,  comprised  in  six  lots  in 
the  auction  room,  there  is  only  one  piece  of  scarlet,  which 
a  buyer  wants,  among  other  colors,  and  at  the  same  time 
scarlet  is  so  much  in  surplus  that  when  sold  alone  it  does 


it 


not  bring  within  twenty  per  cent  of  ordmary  colors.  This 
surplus  of  scarlet  color  would  probably  cause  the  lot 
having  the  piece  in  it  to  be  one  of  the  last  taken.  Natur- 
ally  the  person  bidding  for  the  first  choice  pays  most,  and 
the  price  falls  off  a  little,  according  to  the  desirableness  of 
the  different  colors  in  each  lot.  If  the  buyer  who  wants 
the  lot  with  the  piece  of  scarlet  in  it  holds  off  till  two  or 
three  lots  are  "sold,  he  will  have  a  fair  chance  of  getting 
the  one  he  wants  at  a  less  price.  There  is,  in  such  in- 
stances, too  often  a  fear  that  the  special  lot  may  be  taken, 
and  he  will  therefore  miss  getting  it;  but  even  then 
there  is  not  much  loss,  if  he  gets  all  the  colors  he  wants 
in  another  lot,  except  the  scarlet,  as  on  account  of  its 
abundance  in  the  market  he  could  probably  purchase  a 
piece  of  it  at  private  as  cheap  as  it  sells  then  in  connection 
with  the  other  colors.  Indeed  the  purchaser  of  the  lot 
with  it  in,  if  sought  out,  will  often  be  found  to  have  se- 
lected that  lot  for  some  other  colors  in  it,  and  will  be  glad 
to  get  the  piece  of  scarlet  off  his  hands  at  cost.  Of  course, 
before  a  buyer  can  use  this  kind  of  finesse  advantageously, 
he  must  know  something  of  what  other  buyers  are  in 
need  of,  as  well  as  what  he  needs  himself^  which  is  as- 
certained to  a  great  extent  by  being  among  them  and 
conversing  with  them  at  other  times. 

An  intimate  acquaintance  with  the  auctioneer  is  quite 
necessary  to  enable  a  buyer  to  obtain  these  little  advan- 
tages. A  nod,  or  wink,  or  almost  a  look  from  an  old  buyer 
is  sufficient  for  a  bid,  and  the  auctioneer's  attention  is 
turned  often  towards  such  persons,  looking  for  the  signal, 
while  the  intimations  of  the  stranger,  intended  for  bids, 
pass  by  unheeded,  not  being  understood  except  when 
very  open  and  apparent.  And  when  three  or  four  are 
calling  out  their  names  simultaneously  for  some  special 
lot  of  goods,   the    most  familiar   name   is  likely  to  be 


li-    .  S 


316  oivoiding  disputes  durinff  the  Sale, 

first  called.     Hence  the  first  thing  for  a  new  buyer  to  ^o 
is  to  make  his  face  and  name  familiar  to  the  auctioneer. 
This  he  can  do  socially,  by  such  advances  or  means  as 
he  may  find  best  suited  to  the  case.     It  ought  to  be  more 
than  an  ordinary   acquaintance,  and  should  reach  to  a 
kindly  feeling,  or  at  least  all  unkindly  feelings,  if  any  exist, 
should  be  allayed.     To  this  end  honest  and  straightfor- 
ward dealing,  when  buying  goods,  is  essential ;  as  stand- 
ing to  a  bid  when  once  made,  or  not  denying  it,  as  is  often 
done  ;  nor  should  any  dispute  be  made  about  the  price  of 
goods  if  it  can  possibly  be  avoided.    The  most  honorable 
auctioneer  may  seem  sometimes  to  have  run  up  the  price 
of  the  goods  without  a  bidder.    It  must  often  happen 
that  he  forgets  who  made  the  last  bid,  and  the  price  per- 
haps being  a  little  high,  he  fears  that  the  bidder  will  not 
claim  them  when  they  are  knocked  down,  and  therefore 
calls  out  the  name  of  the  one  he  thinks   was  the  last  bid- 
der.   The  person  whose  name  is  thus  called  may  deny 
that  he  bid  with  such  manner  and  tone  as  to  convey  the 
impression  that  he  thinks  the  auctioneer  is  trying  to  cheat 
him,  and  thus  arouse  an  unpleasant  feeling   towards  him 
in  the  mind  of  the  auctioneer,  or  he  may  relieve  the  latter 
from  his  unpleasant  predicament  by  simply  saying,  "  I  did 
not  mean  that  for  a  bid,"  or  "  I  wish  you  would  let  me 
back  out  from  that,"  or  some  remark  of  such  import,  that 
will  not  lead  the  buyers  present  to  think  the  auctioneer 
at  fault ;  and  by  so  doing  create  a  kindly  feeling  in  tlie  auc- 
tioneer towards  him.    Though  the  auctioneer  can  not  al- 
ways know  from  his  catalogued  price  whether  the  lot  he 
is  selling  is  really  cheap  or  not,  he  very  often  does  know, 
and  his  friendliness  may  save  a  buyer  from  many  a  hard 
bargain,  or  his  enmity  cause  him  to  pay  much  more  for  a 
lot  of  goods  than  he  otherwise  would. 

It  is  often  of  great  importance  to  get  in  a  bid  just  m 


Management  of  the  bidding. 


817 


the  right  place.     After  an  article  is  over  fifty  cents  in 
price,  and  up  to,  say  two  or  three  dollars,  it  generally  is 
advanced  five  cents  at  each  bid,  though  sometimes  only 
two  and  one-half  cents,  of  course  when  near  being  struck 
ofl:'  one  cent  will  often  be  taken,  but  as  a  general  thing 
only  when  two  claim  the  even  bid.     And  it  is  very  com- 
mon, as  we  all  know,  to  fix  even  prices  to  goods,  as  $1.00, 
$1.50,  $1.75,  &c.     Suppose  an  article  be  started  at  $1.25 
by  one  of  two  bidders,  both  of  whom  have  marked  it  at 
$1.50,  the  second  bidder's  advance  would  be  to  $1.30, 
the  first  one  again  $1.35,  the  second  $1.40.     Now,  it  will 
be  plain  that  if  the  first  bidder  goes  to  $1.45  the  second 
will  in  all  probability  go  to  $1.50,  and  get  the  lot.     The 
first  one  should  therefore  break  on  the  regular  advance, 
and  call  out  $1.42^,  leaving  the  second  to  make  the  next 
ordinary  advance,  which  will  be  to  $1.45,  when  the  first 
bidder  again  takes  it  up  by  bidding  at  once  to  $1.50,  and 
unless  the  second  bidder  will  advance  the  ordinary  bid  of 
five  cents  probably  gets  the  goods.     The  advance  at  one 
bid  from  $1.45  to  $1.50  is  preferable  to  an  advance  to 
$1.46,   which  very  prudent  buyers  sometimes  adopt  in 
such  cases — as  in  the  recurring  bids  the   $1.50  bid  would 
come  to  him  should  the  competition  run  it  up  so  far.     But 
generally  one  cent  bids  only  lures  the  competitor  on,  and 
when  $1.50  is  reached,  the  second  bidder  is  tempted  to  bid 
one  cent  more  than  he  marked  the  goods,  and  that  rate  of 
advance  is  by  that  time  so  established  that  the  price  will 
run  still  higher.     Indeed,  in  bidding  the  $1.46  the  auc- 
tioneer might  possibly  go  to  $1.47i,  giving  the  second 
bidder  the  chance  to  come  in  on  the  $1.50  bid.     The  dis- 
position of  an  auctioneer  to  sometimes  advance  the  full 
bid,  though  a  smaller  advance  was  actually  bid,  is  often 
an  advantage  to  a  shrewd  buyer.     Under  circumstances 
such  as  above  mentioned,  when  the  bid  is  at  $1.40,  and 


I 


1 


,;  ■! 

'i 

t^     ■ 


I' 


31g  T/ie  ''  Choice  and  privilege." 

two  and  one-half  cents  more  is  bid,  the  auctioneer  may 
decline  to  take  it  and  go  to  11.45  for  the  first  bidder. 
Now  if  his  competitor  is  not  very  shrewd,  he  may  argue 
that  the  first  bidder  will  decline  to  take  it  at  $1.45,  as  he 
only  bid  $1.42^  and  think  that  he  will  come  m  when  it  is 
knocked  down  and  take  it.     He  will  be  at  least  loth  to 
bid  to  $1.50,  in  the  prospect  of  getting  in  at  the  ^1.4D 
bid,   and   consequently  the   first  bidder  should  quickly, 
by  some  quiet  indication,  let  the  auctioneer  know  that  he 
assents  to  the  advance  to  $1.45.     Sometimes  buyers  m 
these  cases  do   not  give  this  indication  and  the  compe- 
titor or  some  third  bidder  does  ;  and  though  when  the  lot 
is  struck  off  to  another,  the  first  can  fairly  claim   that  the 
bid  was  taken  as  his,  and  he  is  willing,  under  the  rule  that 
"  when  there  are  two  claimants  the  lot  must  be  put  up 
again,"  to  advance  another  bid,  it  does  not  work  well;  an 
excitement  is  created,  other  bidders  perhaps  come  m,  and 
the  goods  are  run  up  above  his  mark. 

On  any  short  line  of  goods,  of  say  half-a-dozen  lots,  or 
what  may  comprise  a  case  or  bale,  when  they   are   all 
about  alike  in  value,  it  is  a  common  custom  to  give  the 
«  choice  and  privilege,"  that  is,  the  person  to  whom  they 
are  struck  off  may  select  any  one  or  more  of  the  lots,  or 
take  them  all,  at  his  option.    This  is  advantageous  to  the 
owner,  as,  if  there  are  but  two  persons,   each  wanting 
a  sincrle  lot,  their  competitive  bidding  will  run  the  price  up 
to  about  the  value ;  and  if  it  does  not,  the  goods  are  passed 
when  the  first  buyer  has  taken  what  he  wants.     If  the 
price  first  made  is  satisfactory,  the  other  bidder  or  any 
others  mav  take  a  lot,  if  he  or  they  will,  and  then  the  bal- 
ance  are  passed.     Of  course  it  may   often  happen   that 
two  such  bidders  alone  run  up  the  price  beyond  the  ex- 
pectations of  the  seller,  who  would  gladly  concede  from 
the  price  they  make  to   close  out  the  balance  of  the  lots, 


"r  \ 


J^ioH^ledffe  of  the  Competitors, 


319 


but  as  there  are  no  other  buyers  wanting  them,  he  regards 
it  as  unwise  to  unnecessarily  offer  them  lower. 

When  a  person  wants  to  buy  a  lot  in  a  line  so  offered, 
it  is  advantageous  to  him  to  be  in  such  a  position  as  to 
see  who  his  competitors  are.  From  the  magnitude  of  their 
business  and  what  he  has  seen  of  their  previous  purchases, 
he  can  judge  somewhat  of  the  probability  of  their  taking 
the  whole  line,  and  hold  off  or  advance  in  his  bid  accord- 
ingly. Suppose,  for  instance,  in  a  line  of  goods  offered 
in  this  way,  a  dealer  desires  to  buy  a  single  lot,  and  has 
marked  to  go  as  high  as  oue  dollar.  He  starts  the  goods 
at  seventy  cents ;  we  will  call  him  No.  1.  He  notices  that 
he  has  two  competitors  bidding  on  the  goods,  one  of  whom 
we  may  call  No.  2,  who  ordinarily  buys  only  single  lots, 
and  the  other,  No.  3,  a  buyer  for  a  large  house,  who  often 
takes  the  whole  line.  The  price  has  reached  90  cents, 
which  is  the  bid  of  No.  3.  No.  1  bids  92J  cents,  and 
No.  2,  95  cents.  No.  3  has  withdrawn  and  does  not  bid 
again.  Now,  No.  1  in  ignorance  of  his  competitor,  might 
bid  up  to  $1.00,  his  marked  price,  fearing  that  the  whole 
line  would  be  taken ;  but  knowing  who  is  his  competitor, 
he  can  be  very  confident  that  if  struck  off  to  him  at 
95  cents,  he  will  only  lake  one  lot,  and  an  opportunity  will 
be  afforded  him  (No.  1,)  to  get  a  lot  at  the  same  price,  or 
possibly  even  a  chance  of  the  price  falling  off  to  his  bid 
of  92J  cents.  The  risks  against  his  getting  it  are  mainly 
two :  one  that  the  larger  buyer,  w^ho  has  stopi3ed  at  90 
cents,  is  lying  in  wait  to  come  in  and  take  the  balance  at 
95  cents  so  soon  as  the  first  bidder  is  supplied ;  the  other, 
that  on  account  of  the  low  price  the  owner  will  pass  the 
balance.  The  probability  of  either  of  these  events  is  to 
be  considered  before  the  goods  are  struck  off  at  95 
cents.  It  may  be  sufficient  to  induce  an  advance  to  97^ 
by  bidder  No.  1.     An  acute  observer  may  detect  in  buyer 


320 


Duplicate  Lots, 


No.  3  a  longing  for  the  opportunity  to  come  in  and  sweep 
the  line,  or  he  may  see  an  unconcern  which  indicates  the 
absence  of  any  desire  for  the  goods  at  a  price  above  90 
cents.  In  like  manner,  the  language  of  the  auctioneer 
or  owner  (if  present)  may  be  so  forcible  of  an  intention 
to  pass  the  balance,  if  the  ffrst  lot  taken  sells  at  95  cents, 
that  it  may  induce  him  to  make  the  advance.  Though 
this  is  not  always  a  safe  guide,  being  frequently  used 
to  stimulate  the  bidding ;  still,  clo"Se  observation  will  gen- 
erally enable  a  buyer  to  tell  whether  the  owner  is  really 
in  earnest  about  passing  them.  When  a  bidder  does  ad- 
vance after  the  express  assertion  that  only  one  lot  will  be 
sold,  if  they  are  afterwards  sold  at  less  price,  he  has  a 
fair  claim  that  his  lot  shall  be  reduced  to  the  same  price 
as  the  balaHce  sold  at. 

Some  kinds  of  goods  are  so  much  injured  by  the  rough 
usage  of  the  auction  room,  that  instead  of  exhibiting  lines 
of  them,  only  one  lot  is  sampled,  and  if  that  brings  a  sat- 
isfactory price,  "  duplicates  "  are  offered.  When  the  du- ' 
plicates  are  noted  on  the  catalogue  or  otherwise  men- 
tioned, the  same  management  can  be  used  to  get  a  dupli- 
cate lot  at  a  low  price,  as  in  buying  from  "  lines  "  of  lots. 
When  the  existence  of  duplicates  is  unknown  but  sus- 
pected, there  is  no  harm  in  asking  if  there  are  any,  and 
governing  the  bidding  according  to  the  answer.  Ordinarily 
a  duplicate  is  worth  more  than  the  sample,  on  account  of 
being  in  order,  but  it  has  its  drawback  in  often  being  in- 
ferior in  quality,  or  style,  or  assortment  to  the  sample, 
owing  to  the  tendency  that  most  men  have  to  pick  out  the 
best  to  show ;  on  precisely  the  same  principle  that  the 
best  peaches  are  very  often  put  on  the  top  of  the  basket. 

In  this  connection  it  may  be  appropriate  to  remind  the 
novice  in  the  auction  room  that  as  much  is  to  be  learned 
from  what  the  auctioneers  and  owners  do  not  say,  as  from 


^unnhiff  ?fp  the  'Price, 


321 


Xvhat  they  do.  When  the  bidding  is  progressing  on  a 
line  of  goods,  as  above  mentioned,  and  it  halts  at  about 
87^  cents,  notice  may  be  given  with  some  emphasis  that 
only  the  one  lot*  will  be  sold,  which  notice  is  frequently 
repeated  as  the  bids  advance  ;  but  when  they  reach  95 
cents,  nothing  more  is  said  about  passing  the  balance, 
or  if  repeated,  it  is  with  quite  a  reduced  earnestness,  in- 
dicating that  though  the  price  of  90  or  even  92 J  cents  is 
not  satisfactory,  95  cents  may  be  sufficiently  so  to  induce 
the  selling  of  the  other  lots  of  the  line.  An  inference 
may  be  drawn  from  silence  in  other  cases,  also,  as  when 
certain  lots  are  commended  for  some  special  quality — as 
being  *' all  wool,"  "pure  silk,'*  "madder  colors,"  etc.. 
while  nothing  is  said  about  it  in  subsequent  lots. 

The  author  is  glad  to  believe  that  the  swindling  cus- 
tom of  running  up  goods  on  the  bidder  by  the  auctioneer, 
so  much  in  vogue  years  ago  in  the  comparative  infancy  of 
the  business,  is  no  longer  encouraged  in  respectable  auc- 
tion houses — in  New  York  city,  at  least.  There  may  be 
an  occasional  lot  of  goods,  for  which  a  certain  price  has 
been  guaranteed  to  the  owner,  or  perhaps  occasionally  one 
of  the  old-time  cryers  drops  into  his.  old  tricks,  or  some 
neophyte  just  commencing,  who  has  yet  to  learn  that 
"  honesty  it  the  best  policy,"  attempts  it,  but  the  buyers 
have  learned  to  detect  it.  An  auctioneer  may,  as  before 
mentioned,  easily  forget  sometimes  who  made  the  bid,  on 
which  he  struck  off  the  goods,  and  have  to  go  back  to 
the  previous  bid ;  but  when  this  occurs  every  three  or  four 
lots,  or  the  name  of  some  absent  or  unknown  buyer  that 
no  one  sees  bidding  is  frequently  called  off,  there  is  some- 
thing worse  than  mere  forgetfulness.  When  our  begin- 
ner sees  these  indications  of  dishonestv,  it  will  be  better 
for  him  to  refrain  from  buying  from  this  auctioneer,  until 
he  learns  enough  about  the  possible  deceptions  of  the 
auction  room  to  take  care  of  himself  in  any  company. 


322  Aroidmff  the  Appearance  of  A^ixiety, 

So  that  the  buyer  may  not  unduly  tempt  the  auctioneer 
to  run  the  bids  up  on  him,  he  should  manage  to  hide  his 
desire  to  bid  again.  When  a  verdant  buyer,  after  making 
a  bid,  stands  with  eager  eye  and  gaping  mouth  waiting 
for  the  bargain,  like  a  cherry,  to  fall  into  it,  there  may  be 
a  strong  temptation  to  the  auctioneer,  particularly  if  the 
price  is  very  low,  just  to  try  if  he  will  not  go  one  bid 

more. 

It  is  more  difficult  than  most  people  would  suppose  for 
a  bidder  to  disguise  his  anxiety  to  get  a  lot  of  goods 
which  is  standing  on  his  bid,  from  the  eye  of  the  auc- 
tioneer. He  may  unconcernedly  look  away,  or  toy  with 
his  catalogue,  or  speak  to  his  neighbor,  but  there  is  very 
apt  to  be  something  in  his  manner  not  natural,  which  be- 
trays his  desire  to  the  auctioneer. 

'Neither  is  it  good  policy  to  show  any  more  concern 
about  buying  the  lots  you  really  want,  than  those  you  do 
not  want.  To  guard  against  this  tendency,  some  buyers 
put  on  an  appearance  of  earnestness  and  anxiety  to  buy 
every  lot,  so  that  they  may  disguise  their  wish  to  buy  cer. 
tain  lots.  Others  try  to  remain  calm  and  collected  at  all 
times,  but  there  is  %  tendency  then  to  refrain  from  bid, 
diner  on  the  goods  they  do  not  want,  and  the  mere  cn-cum^ 
stance  of  bidding  on  other  goods  indicates  their  desire  to 

buy  them. 

There  are  other  advantages  to  be  gained  by  frequently 
biddincr  on  lots  of  goods  which  the -buyer  does  not  wish 
to  buyt  care  being  taken,  of  course,  not  to  bid  high  enough 
to  get  them.  By  this  frequent  bidding  the  buyer's  presence 
is  more  prominently  brought  to  the  notice  of  the  auc- 
tioneer,  and  when  he  really  wants  to  buy,  his  bidding 
is  more  likely  to  be  noticed.  The  risk  of  getting  a  lot 
occasionally,  that  is  not  wanted,  will  always  Umxt  thisad^ 
ventitious  bidding  within  due  bounds ;  though  there  arQ 


The  Starting  ^id. 


323 


always  many  lots  of  goods  offered  in  an  auction  room  not 
inherently  desirable" at  the  prices  they  will  probably  sell 
at,  which  may  be  bid  on  and  bought  at  a  lower  price 
without  risk  of  loss.  Such  frequent  bidding  is  not  dis- 
advantageous to  the  auctioneer,  but  is  rather  favored,  as 
giving  more  life  and  animation  to  the  sale. 

In  starting  the  bidding  on  a  lot  of  goods,  it  is  best  to 
commence  at  a  pretty  fair  price.  A  very  low  start  often 
attracts  persons  who  did  not  think  to  buy,  to  bid  on  the 
lot,  and  they  continue  afterward  to  be  competitors  to  the 
final  bid.  Indeed,  it  is  often  good  policy  to  start  a  lot  of 
goods,  when  it  can  be  done  without  the  notice  of  the 
other  buyers,  at  a  price  nearly  or  quite  up  to  the  mark  to 
buy  at.  Some  buyers  will  be  led  to  think  from  such  a 
start  that  the  price  will  go  beyond  their  mark,  and  will 
withdraw  their  attention  for  the  moment,  while  others 
may  be  disposed  to  withhold  an  advanced  bid  under  the 
supposition  that  the  auctioneer  has  started  the  goods  him- 
self and  has  no  bidder. 

There  is  a  good  deal  of  this*  finessing  practicable  and 
useful  in  buying  goods  in  the  auction  room.  It  only  needs 
a  little  experience,  with  some  acuteness  and  observation, 
to  enable  any  one  acquainted  with  the  value  of  goods  to 
embrace  the  opportunities  which  are  offered. 

Perhaps  a  few  words  of  caution  may  be  in  place,  in  re- 
lation to  "  mock  auctions."  These  swindlinir  concerns 
have  such  protean  forms  that  it  is  impossible  always  to 
recognize  them  by  outward  signs.  For  so  soon  as  any 
feature  becomes  prominent  enough  to  be  noticeable,  or 
pointed  out  as  something  to  be  aware  of,  naturally  it  is 
conformed  to  the  style  of  the  regular  business.  If  the 
writer  were  to  say  that  to-day  a  man  would  be  safe  in  buy- 
ing in  those  auction  rooms  where  a  regular  catalogue  of 
the  goods  is  issued,  and  in  danger  whenever  he  found 


324 


'^  Mock"  Auctions, 


himself  in  an  auction  room  where  there  is  no  catalogue, 
he  would  be  correct.  Bat  let  this  be  once  regarded  as  a 
distinctive  feature,  and  every  "  mock  "  auctioneer  would 
manage  to  have  a  catalogue,  or  the  semblance  of  one  at 
least.  The  old-fashioned  way  of  selling  goods  "  from  the 
shelves "  in  quantities  to  suit  the  buyer,  and  without 
making  them  up  in  "lots"  and  cataloguing  them,  is  pretty 
generally  discarded  by  honest  auctioneers  ;  and  one  inex- 
perienced in  the  auction  room  will  do  better  to  avoid  all! 
places  where  goods  are  sold  in  this  way. 

Perhaps  the   best  precaution  will  be  not  to  buy  in 
in  any  auction  room  until  satisfied  by  enquiries,  made  not 
from  chance  wayfarers,  or  the  companion  for  a  day,  who 
may  be  in  league  with  the  sharpers,  but  from  reliable 
merchants  in  the  locality,  that  the  auctioneer  is  an  honor- 
able dealer.    Unfortunately  for  themselves  the  people  who 
are  most  likely  to  be  victimized  by  the  *' mock"  auc- 
tioneers, and  who  most  need  to  be  on  their  guard,  are  the 
class  who  never  read  the  papers  ;  if  they  did  they  would 
learn  that  the  regular  auctioneers  always  advertise  their 
sales  in  one  or  more  of  the  newspapers,  mentioning,  to 
some  extent,  the  kind  and  character  of  the  goods  which 
will  be  sold,  the  hour  when  the  sale  will  begin,  the  terms 
of  the  sale,  whether  for  cash  or  on  credit ;  and  the  sale, 
rooms  will  generally  be  found  on  side  streets,  at  least  in 
New  York  City:  while  the  "mock"  auctions  are  located 
on  the  principal  thoroughfares,  and  the  managers  do  not 
advertise,  relying  on  catching  their  dupes  as  they  pass 
along,  by  the  sound   of  the  cryer's  "  one  dollar— one  dol, 
lar— one  dollar— wi  dollar— wi  dollar,"  or  the  ordinary 
red  flag  hung  out  at  the  door,^ 


CHAPTER    XXII. 

INVESTMENT  OF   THE   PROFITS   OF   BUSINESS. 

IT  would  seem  natural  to  think  that  men  who  succeed 
in  making  money  in  their  business  will  know  how  to  take 
care  of  it  afterward.  But  having  seen  so  many  instances 
where  they  did  not— where  money  was  drawn  as  profits 
from  the  business,  when  there  were  really  no  surplus 
profits,  and  so  invested  as  that  not  only  that  amonnt  was 
lost,  but  even  more  had  afterward  to  be  drawn  from  the 
business  to  ward  off  disaster  and  loss  on  the  first  invest- 
ment, to  the  injury  of  the  business  itself,— I  believe  that 
a  work  of  this  kind  would  be  incomplete  without  some 
suggestions  on  this  point. 

Before  entering  on  the  main  subject,  a  few  remarks 
may  not  be  amiss,  after  the  manner  of  the  oft-quoted 
Mrs.  Glass,  on  first  having  the  profits  to  invest.  Atten- 
tion to  this  is  of  more  importance  than  in  her  directions 
for  cooking  a  fish,  for  while  there  may  be  grave  doubts 
whether  anything  in  the  semblance  of  a  fish  could  be 
dressed  and  cooked  until  it  was  caught— we  have  most  of 
us  seen  money  drawn  from  a  business  under  the  sem- 
blance of  profits,  and  invested,  when  there  were  really  no 
profits  to  invest.  The  great  importance  of  having  sur- 
plus profits  before  any  attempt  is  made  to  invest  them, 
is  therefore  strongly  impressed  on  the  dealer. 

Some  people  there  are,  of  extreme  prudence,  who  hold 
to  the  opinion  that  a,  trader  should  never  withdraw  any 
money  from  his  business  so  long  as  he  is  in  debt  for  goods 
purchased ;  or,  if  in  consequence  of  such  withdrawal  he 

28 


J 


326         Making  the  Trofits  before  Investing, 

is  afterward  under  the  necessity  of  going  in  debt  for  his 
business  purchases.  Such  a  course  would  be  certainly  a 
very  prudent  one,  and  if  not  always  to  be  advised,  it  at 
least  deserves  consideration;  for,  as  a  general  thing,  a 
man  can  never  so  profitably  invest  his  ready  money  as  in 
the  prepayment  of  his  own  indebtedness— certainly  in 

nothing  so  safe. 

Necessarily  this  would  require  a  large  amount  of  capi- 
tal in  proportion  to  the  business  where  the  sales  are  to 
any  great  extent  on  credit,  and  there  will  often  be  in- 
stances where  so  proportionally  great  a  capital  can  not  be 
kept  in  profitable  use  the  whole  year.  In  some  kinds  of 
business  the  full  capital  would  only  be  in  use  three  or  four 
months  of  the  year,  and  if  a  proportion  of  the  purchases 
could  be  advantageously  made  on  credit,  during  these 
months,  it  might  be  profitable  to  withdraw  some  of  the 
capital  and  substitute  the  credit  for  it. 

It  is  a  part  of  the  dealer's  business  to  keep  his  capital 
actively  at  work  earning  interest.  This  he  fails  to  do 
when  it  lies  idle  half  the  time.  It  can  hardly  be  expected 
that  any  one  can  so  accurately  calculate  the  chances  of 
trade  as  to  always  use  the  whole  of  a  certain  amount  of 
capital,  and  yet  never  at  any  time  be  in  need  of  money. 
While  it  is  safest  to  be  on  the  sure  side,  and  err  by  retain- 
ing too  much  rather  than  too  little,  yet  with  some  men 
it  is  more  profitable  to  retain  only  just  so  much  capital  in 
their  business,  that  they  will  be  sometimes  pinched  a  little 
to  get  along,  and  are  even  under  the  necessity  of  borrow- 
ing temporarily.  This  occasional  necessity  for  money  sim- 
ulates their  energy,  and  induces  them  to  look  more  closely 
to  selling  off  their  goods,  and  collecting  in  their  outstand- 
ing accounts.  The  natural  disposition  of  the  dealer  should 
be  considered  in  this  matter,  and  his  action  governed  ac- 
cordingly.   If,  with  the  accumulation  of  profits  and  cou- 


Surplus  Money  not  always  ^Profits,         327 

sequent  plethora  of  capital,  he  finds  himself  growing  lax 
in  pressing  sales  and  making  collections,  he  would  doubt- 
less be  benefitted  by  such  a  partial  withdrawal  of  capital, 
that  he  would  sometimes  be  in  want  of  money. 

The  points  necessary  to  be  considered,  in  deciding  that 
there  is  a  surplus  of  profit  which  may  be  advantageously 
drawn  are,  therefore,  the  following,  namely :  1st,  Abso- 
lutely no  need  of  it,  as  the  purchases  can  all  be  made  for 
cash  without  it.  2nd,  Or  if  not,  that  for  the  short  periods 
when  credit  is  needed  on  some  of  the  purchases,  the  differ- 
ence in  price,  or  discount  which  can  be  obtained  by  paying 
cash  is  inadequate  to  pay  for  the  use  also  of  the  money 
during  the  rest  of  the  year.  3rd,  The  certainty  of  re- 
ceiving from  sales  and  collections  sufficient  money  to 
pay  for  the  goods  purchased  on  credit  at  the  maturity  of 
the  credit,  or  if  this  is  uncertain,  the  certainty  of  obtain- 
ing temporary  loans,  without  sacrifice,  to  meet  any  emer- 
gency. And  4th,  Whether  the  capital,  if  left  in  the  busi- 
ness, could  be  temporarily  used  or  loaned  in  such  way  as 
to  be  safe  and  earning  interest,  at  the  periods  when  it  is 
not  wanted  in  the  business. 

How  shall  these  be  considered  ?  In  a  business  which 
is  nearly  regular  throughout  the  year — about  the  same 
amount  of  purchases  and  sales  one  month  with  another — 
it  is  not  difficult  to  come  to  satisfactory  conclusions. 
When  the  stock  of  goods  is  once  all  paid  for,  the  ordinary 
monthly  receipts  will  pay  for  the  monthly  purchases,  .and 
any  considerable  amount  of  money  left  over  after  paying 
for  the  purchases,  may  be  regarded  as  surplus  profits ; 
that  is,  if  the  stock  of  goods  is  up  to  the  ordinary  quan- 
tity. But  when  the  business  comes  in  seasons,  as  many 
kinds  of  retail  business  do,  and  for  two  or  three  months 
in  succession,  at  each  of  the  two  or  more  dull  periods  of 
the  year,  the  stock  of  goods  is  greatly  reduced,  there  will 


,^28 


Temporary  'Investments. 


be  correspondingly  large  amounts  of  money  on  hand  over 
and  above  the  requirements  for  paying,  which  can  not  be 
withdrawn  without  danger  that,  when  the  time  comes  to 
increase  the  stock  for  the  busy  season,  this  money  so  with- 
drawn will  be  needed,  and  for  want  of  it  the  businesa 
will  be  endangered.  It  is  the  dealers  of  this  class  who 
are  most  tempted  to  withdraw  undue  amounts  from  their 
business,  under  the  name  of  "  surplus  profits,'*— or  excess 
of  capital  beyond  their  business  wants— even  at  times 
when  they  may  be  owing  large  sums  for  goods  bought  on 
credit,  but  not  yet  due.  Unable  to  get  what  they  think 
an  adequate  reduction  as  discount  for  prepayment,  they 
seek  other  ways  of  using  their  money,  intending  that  this 
other  use  shall  be  only  a  temporary  one ;  but  too  often, 
to  their  sorrow,  they  find  it  so  permanent  that  afterward 
when  they  require  the  money  in  the  business,  they  can  not 
restore  it  without  a  sacrifice. 

Assuming,  however,  that  any  contemplated  withdrawal 
of  money  as  surplus  profit  has  been  duly  considered,  and 
the  capital  really  found  in  excess  of  what  can  be  advan- 
ta^^eously  used  in  the  business,  we  will  pass  on  to  con- 
sider, first,  some  of  the  disadvantageous  ways  in  which 
it  may  be  invested,  trusting  that  the  remarks  may  be,  in 
some  measure,  useful  in  warding  off  a  calamity  which 
often  overtakes  the  heedless.  Scarcely  a  reader  of  this, 
with  ten  years  experience,  but  will  be  able  to  call  to 
mind  some  acquaintance  who,  while  doing  a  prosperous 
business,  in  the  belief  that  he  had  made  a  good  deal  of 
money,  was  induced  to  take  some  of  it  out  of  his  business 
and  invest  it  in  other  adventures  which  eventually  caused 
his  failure. 

A  trader  has,  for  example,  really  made  a  couple  of 
thousand  dollars,  which  he  docs  not  need  in  his  busi- 
ness.    He  sees  what  he  regards  as  a  good  opportunity 


Investments  that  Call  for  More 


> 


329 


to  mvest  it  in  purchasing  a  piece  of  land  in  the  outskirts 
of  the   village   or   town   in   which   he    lives.      The    lot 
costs  twice  the  amount  he  has  to  spare  from  his  business, 
and  he  leaves  the  balance  unpaid  on  mortgage,  trusting 
that  even  before  the  mortgage  matures  he  will  have  made 
enough  more  in  his  business  to  pay  the  balance.    There 
comel  on  a  prolonged  decline  in  trade,  however,  owing  to 
ordinary  causes,  and  when  the  mortgage  is  due  he  has  to 
draw  the  money  out  of  his  business  to  pay  it,  knowing  that 
it  is  not  made,  but  relying  on  occasional  borrowing  at  bank, 
or  li-ora  his  friends,  to  help  him  out  in  any  tight  pinch  of 
the  money  market.     Soon  his  payments  are  not  made 
with  the  same  promptness  as  heretofore,  and  his  credit 
suffers.     On  this  account  his  business  is  still  less  profitr 
able,   and  he  barely  makes  his  expenses,  if   even  that. 
His  land  meanwhile  lies    dead   on  his   hands ;    he  can 
not  sell  it  except  at  a  loss,  and  it  brings  in  no  income. 
With  a  view  to  make  it  earn  him  something,  he  concludes 
to  take  up  money  on  a  mortgage  on  the  lot  and  build  a 
honse  to  rent  out.    But  after  the  house  is  built  it  does 
not  rent,  and  so  he  occupies  it  himself,  thus  saving  the  rent 
of  the  house  which  he  before  rented.    True,  the  mterest 
on  the  mortgage  which  he  now  has  to  pay,  is  much  more 
than  the  rent  he  before  paid,  and  as  the  house  is  new  it 
needs  many  additions  to  make  it   comfortable— the  lot 
must  be  fenced  and  graded,  and  sodded— and  all  this  takes 
time  and  money.    During  all  this  period  he  can  not  so 
faithfully  give  his  attention  to  his  business.     He  has  too 
much  other  work  on  his  hands,  and  the  business   does 
not  prosper.    Soon  the  crisis  is  at  hand ;  he  is  at  the  end  of 
his  borrowing  and  is  compelled  to  fail.    To  fail  simply 
because  he  invested,  in  a  disadvantageous  way,  the  two 
thousand  dollars  he  had  actually  made  in  his  business. 
Such  results  are  found  not  only  in  investments  in  town 


330 


^  I^eH'  Experiences, 


lots,  but  often  follow  the  more  speculative  enterprises  which 
a  trader  may  be  led  into  as  an  investment  for  his  surplus 
moneys,  such  as  manufacturing  enterprises,  steamboat  or 
stage  lines,  newspaper  establishments,  patents,  wild  lands 
in  the  west,  gold,  silver,  copper,  lead  or  iron  mines,  etc. 

A  few  instances  of  many,  that  are  within  the  recollec- 
tion of  the  writer,  will  show  how  uncertain  is  the  limit  to, 
and  the  profit  of,  some  investments. 

One  dealer,  having  a  surplus  of  five  thousand  dollars 
in  his  business,  concluded  to  invest  it  in  building  a  store  to 
save  what  he  regarded  as  an  exorbitant  rent.  This  amount 
was  deemed  by  the  builder  fully  sufficient  to  complete  the 
work ;  yet  when  the  store  was  entirely  finished,  it  had 
required  an  outlay  of  nine  thousand  dollars.  The  extra 
amount  had  to  be  taken  from  his  business ;  and  the  loss  to 
it  thereby,  together  with  the  want  of  the  proper  atten- 
tion to  the  business,  while  the  building  was  in  progress  of 
erection,  so  injured  his  trade,  that  in  a  period  of  com- 
mercial adversity,  about  eighteen  months  after,  he  had  to 
suspend  payment,  much  to  his  mortification  and  loss. 
Though  in  itself  the  investment  in  the  building  was  a  good 
one,  still  it  proved  a  bad  one  for  him,  as  it  ruined  his 
business  which  was  of  far  more  value  to  him  than  the 
$5,000  he  had  first  intended  to  invest. 

Another  instance  is  of  a  retailer  in  a  western  town, 
who  having  some  $6,000  to  spare,  concluded  to  unite  with 
a  man  who  had  a  like  amount,  and  who  also  had  ex- 
perience in  the  business,  in  erecting  a  hotel  in  the  town 
which  needed  one.  Each  party  was  to  furnish  $6,000, 
and  it  was  fully  suflScient  to  build  and  furnish  the  house. 
The  walls  were  not  far  above  ground,  however,  when  the 
other  party  failed  to  respond  with  his  share  of  the  money, 
something  having  occurred  by  which  he  lost  the  means 
he  had  intended  to  put  in.    The  necessity  was  placed  on 


Inveshnent  in  a  Hotel,  Mtc, 


331 


the  retailer  of  either  abandoning  the  enterprise  and  sink- 
ing  what  he  had  put  in,  or  of  taking  upon  himself  the  whole 
bu^rden.     He  chose  the  latter,  and  managed  by  borrowmg 
money  on  mortgage  on  the  building  at  high  rates  of  m- 
terest,  to  complete  the  house,  but  before  he  could  get  an 
occupant,  the  interest  on  the  mortgage  became  so  heavy 
that  he  could  not  respond,  and  the  house  was  sold  under 
foreclosure,  actually  leaving  him  in  debt  on  the  bond.    In 
the  meantime  his  business  had  been  losing  ground.    In 
the  struggle  to  sustain  himself  in  the  hotel  investment  he 
had  drawn  too  heavily  on  his  business,  which  from  tem- 
porary inattention  had  declined,  and  he  was  compelled  to 
fail.    His  creditors  could  not  understand  how  a  man  who 
stood  so  fair  a  short  time  before  could  be  so  badly  oflT, 
and  quite  generally  refused  his  compromise  ofiers.     He 
was  compelled  to  make  an  assignment,  his  business  was 
entirely  broken  up,  and  he  became  a  poor,  shiftless  wan- 
derer, dying  a  few  years  later,  leaving  not  even  suflacient 
to  decently  bury  him. 

Still  another  recurs  to  my  mind,  who  dealt  quite  consid- 
erably, in  an  article  which  he  sold  to  several  manu- 
facturers in  the  neighborhood,  and  having  made  some 
money  for  which  he  had  no  use  in  his  business,  concluded 
to  invest  it  in  manufacturing  this  article,  with  a  view  to 
getting  it  cheaper.  It  was  to  require  but  two  thousand 
dollars,  and  this  amount  was  invested.  But  he  soon  found 
that  if  he  would  manufacture  the  article  cheaply,  he  must 
do  it  on  a  larger  scale.  He  gradually  added  to  it  as  hQ 
could  spare  funds,  until  he  had  over  ten  thousand  dollars 
invested,  and  he  then  told  me  that  notwithstanding 
the  time  he  gave  to  it  himself,  purchasing  the  raw  ma- 
terial and  seUing  the  manufactured  goods,  the  net  profit 
did  not  exceed  simple  interest  on  the  capital.  Fortunately 
his  original  business  was  not  neglected,  and  contmued 


332 


Speculattve  Investments  'Dangerous, 


% 

r 


profitable,  enabling  him  to  draw  these  additional  sums 
without  injury  to  it. 

A  small  dealer  in  a  western  town  thought  he  had  five 
hundred  dollars  surplus,  which  he  drew  out  of  his  busi- 
ness to  invest  in  an  enterprise  in  getting  out  lumber  from 
the  pine  forests  of  Michigan,  in  the  belief  that  he  could 
surely  double  it  each  winter.  In  two  years  after  he  failed, 
and  it  then  turned  out  from  careful  investigation,  that  he 
had  not  made  anything  in  his  business  when  he  took  the 
1500  out,  and  that  subsequently  he  had  put  into  the  same 
adventure  $1,000  more;  and  these  two  amounts  were 
more  than  his  original  capital.  He  had  never  drawn  or 
realized  a  dollar  of  profits  from  the  lumbering,  and  the 
only  thing  he  had  to  show  his  anxious  creditors  for  this 
withdrawal  of  so-called  profits,  was  a  quarter  interest  in 
a  steam  saw-mill  in  the  Michigan  wilderness;  which 
though  reasonably  well  mortgaged,  he  still  insisted  was  a 
good  investment,  if  the  concern  could  only  raise  money 
enough  to  get  a  new  boiler,  the  old  one  being  about  worn 
out.  The  $1,500  was  not  much  to  invest,  it  is  true,  but 
in  this  case  it  was  more  than  his  original  capital,  and  more 
than  he  could  have  realized  from  the  business  by  closing 
it  up  under  the  most  favorable  circumstances.  In  addi- 
tion to  the  loss  of  the  capital,  there  had  been  nearly  as 
great  a  loss  while  the  lumber  speculation  was  going  on, 
from  reduced  sales,  depreciation  on  stock,  lessened  profits 
and  the  careless  trusting  out  of  goods — the  natural  re- 
sults of  inattention  to  business.  All  these  misfortunes 
made  it  impossible  for  him  to  pay  over  twenty-five  per 
cent  of  his  indebtedness,  which  his  creditors  eventually 
accepted,  leaving  him  to  try  his  skill  once  more. 

These  instances  are  fair  examples,  and  sufficient  to  show 
the  folly  of  not  letting  well  alone.  The  business  world 
generally  regarded  those  that  failed  as  unfortunate.    Had 


^wo  Lessons  to  be  Learned, 


333 


they  been  considered  incompdent^  it  would  have  been  more 
correct. 

Two  lessons  are  to  be  learned  from  such  experiences. 
One,  that  no  investment  of  surplus  money  in  a  business 
should  be  made  in  any  scheme  or  undertaking  that  will 
subsequently  require  more  money  to  be  added  to  it  which 
has  yet  to  be  made ;  the  other,  not  to  invest  in  anything 
which  is  likely  to  largely  take  up  the  dealer's  time  and  at- 
tention in  looking  after  the  investment.  Even  though  all 
of  the  dealer's  experience  tends  to  prove  that  he  will  easily 
make  the  additional  sum  of  money  in  his  business  by  the 
time  it  will  be  required,  stQl  it  is  unwise  to  venture  it. 
There  are  too  many  contingencies  in  business  for  any  one 
to  say  what  the  future  will  be,  and  it  is  by  far  the  safer 
plan  to  invest  only  just  so  much  as  is  made,  keeping  clear 
of  any  obligation  to  add  to  the  investment  at  any  future 
time. 

It  may  be  said  that  it  is  not  hard  to  see  the  difficulties 
and  dangers  that  stand  in  the  way  of  any  enterprise  after 
we  have  stumbled  over  them,  but  it  is  no  assumption  to 
say  that  if  the  surplus  profit,  or  even  supposed  surplus 
profit,  of  either  of  the  unfortunates  in  the  cases  cited,  or  in 
similar  circumstances,  had  been  carefully  invested  in  good 
bonds  and  mortgages,  or  in  sound  dividend-paying  stocks, 
the  difficulties  which  subsequently  occurred  to  them  would 
have  been  avoided. 

A  retailer  who  has  a  good  paying  business,  which  re- 
quires his  time  to  keep  it  in  due  order  and  profitable  con- 
dition (and  every  business,  as  the  means  increase,  should 
be  extended  to  that  point,  when,  as  in  most  cases,  it  can  be 
done  advantageously),  ought  to  discard  in  his  investments 
all  idea  of  speculating  or  profiting  in  any  way  on  the 
money  invested,  except  simply  by  the  interest.  What- 
ever of  gain  there  is,  more  than  this,  will  either  be  at  the 


If 


!-il 


334 


What  are  Good  Investments. 


Sonds  and  Mortgages, 


335 


risk  of  the  principal  invested,  or  will  require  more  or 
less  of  the  dealer's  attention  and  time  which  should  be  de- 
voted to  his  legitimate  business.  Whatever  superior 
powers  he  may  possess,  or  think  he  has,  for  business  en- 
terprise, will  be  more  advantageously  kept  at  work  with- 
in the  range  of  his  regular  operations,  and  he  is  far  more 
likely  to  accumulate  wealth  in  an  increased  degree,  in- 
side of  his  business,  than  by  outside  adventures. 

There  is  quite  a  diversity  of  opinion  among  business 
men,  as  to  what  are  good  investments.  Whatever  will 
surely  yield  the  legal  interest,  and  securely  hold  the  prin- 
cipal sum  loaned,  without  care  and  attention  on  the  part 
of  the  lender,  may  be  regarded  as  such ;  and  whatever 
carries  with  it  the  risk  of  loss  of  the  principal  or  a  part  of 
it,  even  though  the  promise  of  large  annual  gains,  are 
connected  with  it,  should  be  regarded — simply  as  an  in- 
vestment— a  poor  one.  It  may  be  a  good  operation  or 
speculation,  but  not  a  good  investment. 

The  highest  class  of  investments  are  no  doubt  good 
bonds,  secured  by  mortsjages  on  improved  real  estate,  to 
one-half  or  two-thirds  the  value.  This  is  a  favorite  in- 
vestment with  those  who  have  made  their  money  by  slow 
and  sure  methods,  and  desire  in  all  their  investments  not 
to  incur  loss.  It  is  pretty  nearly  the  only  investment 
which  may  not  at  times  induce  a  spirit  of  speculation. 
An  investment  of  $1,000  in  railroad  or  state  bonds,  or 
bank  stock,  which  at  the  end  of  a  year  returns  not  only 
the  regular  interest,  but  has  advanced  in  value  ten  or 
fifteen  per  cent,  presents  a  strong  inducement  to  speculate 
by  the  buying  of  another  $1,000  worth  of  some  other 
stock  which  is  now  depressed,  but  which  must  soon  be 
higher — in  the  opinion  of  the  newspapers  at  least.  So  also 
in  the  purchase  of  real  estate.    If  the  investment  is  found, 


after  a  year  or  two,  largely  increasing  in  value,  besides 
having  yielded  its  regular  income,  there  is  a  temptation 
to  invest  more  money  in  the  like  manner,  even  when  it 
can  not  be  spared,  and  the  investor's  thoughts  are  con- 
tinually running  npon  the  prospects  of  the  increase  of 
value  in  different  localities  around  him.  The  perfect  se- 
curity of  the  principal,  and  the  regular  payment  of  in- 
terest is  less  sought  after,  and  every  investment  is  really 
a  speculation  which  is  to  largely  increase  the  principal 
invested.  Like  drawing  a  small  prize  in  a  lottery,  there 
is  always  a  strong  desire  to  try  it  over  again.  And  when 
a  man  once  gets  into  that  adventurous  habit,  in  what 
should  be  cautious  business  transactions,  there  are  more 
chances  against  his  eventual  success  than  there  are  in  his 

favor. 

Money  loaned  on  bond  and  mortgage  brings  its  regular 
income,  with  the  least  possible  care  on  the  lender's  part. 
The  principal  is  never  worth  more,  and  rarely  worth  less. 
It  presents  no  inducement  to  speculate,  nor  does  it  need 
the  time  that  should  be  devoted  to  the  regular  business. 
Taken  all  in  all,  these  investments  wil.  be  found  fully  as 
profitable  as  any  other  class,  which  may  promise  more 
from  an  increase  of  value  of  the  principal  invested. 

Those  that  have  not  given  the  subject  especial  atten- 
tion, will  be  surprised  to  notice  how  fast  a  fund  will  ac- 
cumulate at  even  seven  per  cent  interest,  when  there  are 
no  drawbacks,  and  the  interest  is  regularly  compounded 
or  re-invested,  which  could  always  be  done  by  one  who 
invested  only  his  surplus  profits  each  year.  It  is  at  least 
essential  to  consider  this  as  done  when  we  compare  results 
with  a  real  estate  investment  or  speculation,  where  often 
for  years  no  income  is  realized,  and  it  may  be  said  to  be 
re-invested  year  after  year,  showing  its  results  in  the 
end  in  the  increased  value  of  the  real  estate. 


336 


Itapid  A.ccumutation  of  Interest* 


Suppose,  for  example,  a  dealer  at  thirty  years  of  age 
in  such  a  business  that  he  can  safely  draw  $1,000  of  sur- 
plus profits  out  of  it,  with  a  continuing  ability  to  draw 
t-he  same  amount  out  yearly,  till  he  shall  be  forty  years 
of  age.  If  the  $1,000  is  inyested  each  year,  and  the 
yearly  interest  of  seven  per  cent  added  to  the  investment, 
it  will  amount  in  the  ten  years  to  $15,783.  Continued  for 
ten  years  longer,  or  until  he  shall  be  fifty  years  old,  he 
will  have  $44,865.  And  in  another  ten  years,  or  when 
he  is  sixty  years  old,  $102,073.  Now,  $1,000  a  year  is 
not  a  large  net  profit  for  a  retailer  to  make,  taking  one 
year  with  another.  The  most  of  those  selling  even 
$10,000  of  goods  a  year  expect  to  make  that  much  clear 
of  all  expenses.  And  yet  how  few  are  there  among  all 
who  have  been  in  business,  that  have  accumulated  at  fifty 
years  of  age  $45,000,  or  will  be  worth  at  sixty  years  of 
age,  should  they  continue  in  business  so  long,  $100,000? 

There  are  instances  of  men  who  have  made  money 
through  fortunate  investments  in  real  estate,  much  more 
than  they  could  have  made  by  investing  their  means  in 
securities  bringing  only  a  regular  interest ;  but  they  are 
fewer  than  is  generally  supposed.  They  are  like  the  prizes 
in  a  lottery — many  blanks  to  the  one  prize. 

It  is  very  doubtful  whether  the  annual  net  income  from 
real  estate,  throughout  the  whole  country,  including 
the  advance  in  value,  and  deducting  the  depreciation,  the 
wear  of  buildings  and  improvements,  and  also,  making  a 
fair  allowance  for  the  services  of  those  who  do  the  work 
required  to  earn  the  income  in  gross,  will  exceed  four  per 
cent.  There  are  thriving  cities  where  the  increase  of 
value  alone  in  some  localities,  gives  greater  average  yearly 
results  than  that  rate ;  but  it  must  be  remembered  that 
this  increase  is  first  obtained  by  a  large  expenditure,  that 
is  lost  sight  of,  in  assessments  for  street  openings,  paving, 


'JCeat  Ji^state  Jufestttients, 


337 


sewers,  etc.  And  sometimes,  too,  this  increase  is  at  the 
expense  of  some  other  locality,  which  in  the  changes  of 
business,  is  left  to  languish  and  decline  in  value.  That 
many  of  our  "  smart "  Western  cities  have  thus  grown 
up,  by  a  transfer  of  Eastern  capital  and  population,  and 
the  Eastern  towns  and  villages  suffered  a  decline  in  value 
from  this  transfer,  is  undoubted. 

If  a  dealer  proposing  to  invest  his  surplus  profits  in 
real  estate  could  always  be  sure  that  the  locality  will  con- 
tinue to  increase  and  grow  rapidly,  this  class  of  invest- 
ments would  rank  among  the  highest.  But  the  causes 
for  the  growth  and  decline  of  towns  and  cities  are  too  re- 
mote and  hidden  to  be  readily  seen  or  understood,  and 
the  chances  are  quite  as  great  that  the  property  selected 
to  invest  in,  under  ordinary  circumstances,  will  only  just 
hold  its  own  in  a  long  series  of  years,  as  that  it  will 
largely  increase  in  value.  So  largely,  at  least,  in  view  of 
the  outlays  and  attention  such  property  requires,  as  to 
make  an  investment  advantageous. 

There  are,  no  doubt,  instances  where  money  can  be  ad- 
vantageously invested  in  real  estate.  It  is  meant,  only, 
that  as  a  rule  the  other  securities  are  to  be  preferred, 
while  a  man  is  in  business  and  has  the  cares  and  anxieties 
of  business  over  him.  It  would  be  a  good  rule  for  any 
dealer  to  adopt,  who  intended  to  invest  his  surplus 
money  in  real  estate,  to  never  sell  the  property  he  bought, 
except  under  peculiar  circumstances.  The  expectation 
of  holding,  during  his  life-time,  any  piece  of  property  he 
mi^ht  buy,  looking  to  get  simply  the  income  from  it,  and 
to  increasing  that  income  by  judicious  outlays  on  the  prop- 
erty, would  mduce  greater  caution  in  making  selections 
that  would  always  produce  income.  The  difficulty  is  for 
a  business  man  to  avoid  regarding  such  investments  as 
purchases  made  in  his  business,  merely  to  sell  again  when 

29 


338       ^drantaffe  o/  Jnconyertible  Jtiyesttueuts* 

he  gets  a  good  profit,  and  thus  be  induced  oftentimes  to 
purchase  speculatively  when  he  cannot  hold  the  property. 
One  of  the  most  frequent   objections  made  to  invest- 
Jtnents  in  bonds  and  mortgages,  and  one  often  made  by 
those  who  do  not  wish  to  speculate  with  their  money 
either,  is  that  the  security  is  not  readily  convertible  into 
money,  if  in  any  emergency  in  business,  or  for  other  cause 
they  should  need  it,  as  it  is  when  invested  in  bonds  or 
stocks  of  incorporations,  which  generally  have  a  market- 
able value  in  cities,  and  can  be  more  readily  turned  into 
money,  or  used  as  collateral  for  temporary  loans.     This 
quality,  though,  ought  to  be  esteemed  as  one  of  the  very 
best  grounds  why  the  investment  should  be  preferred.    A 
dealer  ought  not  to  take  the  money  out  of  his  business  at 
all,  unless  well  assured  that  he  will  not  require  it  there, 
and  then  the  more  thoroughly  he  puts  it  out  of  the  way, 
and  himself  out  of  the  way  of  its  influence  as  inducing 
speculative  enterprises,  by  investing  it  so  that  he  can  not 
readily  get  at  the  principal,  making  sure  that  it  is  safe, 
and  that  the  interest  will  be  regularly  paid,  the  better 
will  he  be  off  in  the  end.     One  who  is  known  always  to 
have  means  in  hand  ready  to  embark  in  any  undertaking, 
will  be  very  sure  to  find  acquaintances  who  have  this  or 
that  enterprise  all  arranged  to  "  make  a  fortune  for  any 
man  who  will  furnish  the  money  to  carry  it  out,"  and 
some  of  the  schemes  will  seem  so  plausible  that  it  will 
sometimes  be  quite  fortunate  for  him  if  his  surplus  capital 
is  so  invested,  that  he  is  unable  to  yield  to  the  temptations. 
The  aim  of  a  business  man  should  be  not  only  to  make 
a  living,  but  to  accumulate  something  as  a  provision  for 
a  period  when  old  age  or  helplessness  overtakes  him,  and 
to  aid  or  assist  moderately  those  whom  he  has  helped  to 
bring  into  existence,  in  their  start  in  life.     And  until  he 
has  a  reasonable  accumulation  for  these  purposes  it  is  poor 


£'eeplng  ^rerythi?iff  at  ^Isk, 


330 


policy  to  so  invest  as  to  keep  everything  at  risk.  All  in- 
vestments promising  more  than  ordinary  interest,  do  so  at 
the  risk  of  loss  of  principal,  in  whole  or  in  part,  and 
are  therefore  all  of  the  nature  of  a  retailer's  ordinary 
business.  There  is  a  chance  for  large  gains,  and  a  possibility 
also  of  considerable  loss.  Under  such  circumstances  to 
continue  adding  the  gains  of  one  year  to  the  business  of 
the  next,  and  thus  hazarding  the  whole  from  year  to  year, 
is  inconsistent  with  the  idea  of  laying  up  a  fund  for  old  age. 
The  well-known  rule  of  the  gamester  that  he  who  con- 
tinually adds  his  winning  to  his  next  stake  must  lose  in 
the  end,  is  true  also,  in  a  great  measure,  of  business. 
The  business  man  plays  with  fortune  in  the  same  way, 
and  though  fortunate  for  nine  years  in  succession,  if  each 
successive  year  he  risks  all  of  the  profits  he  may  find 
in  the  tentli  turn  of  the  wheel  that  all  is  gone.  And  it 
does  not  much  matter  as  to  what  his  dealings  have  been 
in,  whether  merchandise,  real  estate,  or  other  things  of  un- 
certain value,  when  the  crisis  comes  and  they  have  to  be 
sacrificed  to  pay  his  debts,  all  are  alike  reduced  in  value ; 
and  if  his  indebtedness  is  great,  are  frequently  found  in- 
sufficient at  their  shrunken  value  to  pay  what  he  owes, 
thus  leaving  him  bankrupt  in  fortune — happy  if  not  in 
spirit — to  begin  his  business  career  over  again. 


CHAPTER  XXni. 


INSOLVENCY. 


THE  story  is  told  of  an  author  of  a  system  of  military 
tactics,  who  declined  inserting  in  his  work  a  chapter  on 
the  method  of  conducting  a  retreat,  on  the  ground  that  the 
soldiers  of  his  country  ought  never  to  retreat.  This  chap- 
ter might  with  propriety  be  left  out  for  somewhat  similar 
reasons,  for  if  a  business  has  been  conducted  on  the  prin- 
ciples and  plans  set  forth  in  the  previous  chapters,  insolv- 
ency would  be  so  rare  that  no  instructions  would  be 
needed.  In  view,  however,  of  the  vicissitudes  which  at- 
tend merchandising,  it  will  doubtless  be  true  that  some 
persons  will  read  this  book  for  the  first  time  when  they  are 
already  in  failing  circumstances.  For  their  advantage,  at 
least,  this  chapter  is  submitted. 

It  must  be  regarded  as  a  great  disadvantage  to  the  busi- 
ness interests  of  the  country  that  we  are  unable  to  devise 
and  retain  on  our  statute-books  a  well-digested  national 
bankrupt  law  ;  one  that  would  be  so  fair,  just,  and  liberal 
that  there  would  be  no  seeming  necessity  for  concealment 
by  the  insolvent,  nor  for  severity  by  the  creditor.  That 
recently  repealed,  though  too  costly  in  its  administration, 
had  many  good  points,  but  later  amendments  so  changed 
its  character  that  it  was  not  difficult  for  an  insolvent  to 
obtain  a  release  from  his  debts  and  retain  the  most  of  his 

assets. 

The    insolvent    laws   of    the  different   States,   so    far 

as    observed    by    the    author,  under    which   insolvents 

can     now    obtain    or    secure  even     a     local    release 


Society* s  La7t^  for  the  I?tsotvent, 


341 


from  their  liabilities,  have  all  failed  to  provide  that  mu- 
tual benefit  to  both  debtor  and  creditor  that  such  laws 
could  furnish.  They  seem  to  have  been  gotten  up  in  the 
interest  of  one  class  alone,  and  are  either  so  illiberal  in 
their  provisions  as  to  bear  more  harshly  on  the  insol- 
vent than  his  creditors  ordinarily  would,  or  are  so  laxly 
drawn  that  dishonest  men  have  too  great  facilities  for  dc 
frauding  their  creditors. 

It  has  for  many  years  past  been  a  moot  question  as  to 
how  far  the  law,  representing  society,  should  interfere 
between  individuals  in  relation  to  their  dealings  with  each 
other  on  credit,  and  compulsorily  enforce  any  promise 
made  by  one  to  another  for  the  payment  of  money. 

At  one  extreme  are  found  those  who  insist  that  society 
should  require  every  debtor  to  make  absolute  payment 
according  to  his  promise,  and  should  punish  him  for  every 
failure.  Diametrically  at  the  other  extreme  stand  those 
who  hold  that  if  one  member  of  society  chooses  to  en- 
trust any  of  his  goods  to  another,  on  the  mere  pro- 
mise to  pay  for  them  at  some  future  time,  it  is  a  matter 
solely  between  the  two,  of  which  society  should  take  no 
formal  notice  whatever;  but  should  leave  the  non-ful- 
fillment of  the  promise  to  have  its  simple  and  ordinary 
effect  on  the  reputation  of  the  promisor,  who,  in  their 
opinion,  will  be  fully  punished  by  the  withdrawal  of  con- 
fidence from  hira,  in  a  g-eater  or  less  degree,  according 
to  the  special  demerit  of  the  case. 

That  even  justice  is  found  somewhere  between  these 
two  extremes  can  not  be  doubted.  But  precisely  where 
it  is  found  will  depend  very  much  whether  we  are  at  the 
creditor's  or  the  insolvent  debtor's  stand-point  of  obser- 
vation. 

While  it  is  noticeable  that  the  degree  of  impoverish- 
ment regarded  as  sufficient  to  exonerate  a  debtor  from 


342 


Taking  the  Last  dollar. 


Means  Exempt  from  J^xecution. 


343 


i 


the  immediate  necessity  of  paying  a  debt  is  variable- 
some  thinking  that  the  insolvent  is  entitled  to  exempt 
sufficient  means  to  enable  him  to  live  comfortably  in  a 
"four  story  brown-stone  front,  with  all  the  modern  im- 
provements "—it  is  apparent  that  the  opinion  of  the 
world  has  relaxed  greatly  from  the  old  stringent  require- 
ment of  the  complete  denudation  of  the  debtor.  We 
now  look  back,  as  to  an  age  of  barbarism,  to  the  period 
when  the  unfortunate  debtor  was  forcibly  stripped  of  his 
last  dollar  to  make  good  his  promises  to  pay ;  and  if  this 
was  insufficient,  suffered  imprisonment  in  addition.  A 
strong  evidence  that  the  opinions  of  the  world  have 
changed  in  this  respect,  is  found  in  the  presence  of  men 
in  high  positions  of  honor  in  society  and  in  the  christian 
church,  who  live  and  move  without  reproach,  in  a  style 
requiring  considerable  income  to  support,  beyond  what 
would  be  requisite  for  the  simple  necessaries  of  life,  and 
who  are  yet  known  to  be  owing  debts  which  they  do  not 
even  hold  out  a  promise  of  ever  paying.  The  only  fair 
inference  is  that  society  concedes  that  when  a  business 
misfortune  or  misadventure  occurs  to  a  debtor,  and  he 
becomes  unable  to  pay  his  creditors,  justice  does  not  re- 
quire that  he  shall  give  up  the  last  dollar  of  what  he  be- 
fore possessed,  but  that  in  some  respect  the  creditors 
shall  bear  a  share  of  the  burden  themselves. 

Many  will  no  doubt  say  that  it  is  a  vicious  state  of  so- 
ciety which  encourages  or  sanctions  such  a  course,  and 
that  an  insolvent  debtor  is  entitled  to  nothing  except  from 
the  mercy  or  forbearance  of  his  creditors.  Tli^  same  per- 
sons, however,  willingly  concede  the  duty  of  creditors  to 
be  liberal  and  charitable  towards  their  unfortunate  debtors 
when  honestly  unable  to  pay.  In  yielding  this  much  they 
admit  the  justice  of  some  provision  for  the  debtor,  which 
would  shield   him  from   the  uncharitable  and    illiberal 


among  his  creditors.  The  one  duty  is  justly  deduced 
from  the  other. 

Charity  and  mercy  towards  those  in  distressed  cir- 
cumstances is  often  held  up  to  individuals  and  classes  as 
a  christian  duty,  and  it  is  well  worthy  of  consideration 
whether  the  duty  is  not  actually  obligatory  in  strict  justice 
on  the  creditors  of  an  honest  insolvent  debtor.  The  ac- 
cidents and  incidents  of  trade  are  governed  so  much  by 
the  laws  and  customs  of  society,  and  the  society  which 
has  so  arranged  affairs,  or  failed  to  arrange  them,  as  that 
losses  fall  on  individuals  therein,  which  they  could  not 
foresee  or  provide  against,  may  with  great  propriety  be 
called  on  to  bear  some  share  of  the  loss.  The  suffering 
one  may  not  be  able  always  to  point  to  individual  mem- 
bers of  society  and  say  you,  or  you,  should  bear  a  share 
of  my  burden ;  but  he  can  sometimes  do  so,  as  in  the  case 
of  an  insolvent  debtor  to  his  creditors  who  have  pro- 
fited by  the  dealings  between  them,  and  he  may  ask 
them  with  great  propriety,  if  not  with  justice,  to  bear  a 
share  of  the  loss  he  has  sustained,  by  accepting  as  in  full 
all  that  he  possesses,  even  though  it  is  but  a  part  of 
the  amount  promised  them,  and  releasing  him  from  the 
obligation. 

Another  evidence  of  the  more  liberal  spirit  of  the  age, 
in  this  respect,  is  found  in  the  tendency  of  recent  laws  to 
increase  and  extend  the  list  of  exempted  goods  of  an  im- 
poverished debtor,  Avhich  can  not  be  taken  under  an  exe- 
cution for  debt.  These  laws,  originating  in  a  desire  to 
protect  society  from  the  pauperism  of  the  insolvent,  and 
to  keep  his  family  out  of  the  alms-house,  originally  ex- 
empted a  very  limited  amount  of  household  goods  and 
provisions;  just  sufficient  for  the  present  necessities  of 
the  family.  But  in  recent  years  the  list  has  been  extended 
go  that  in  many  states  the  homestead,  with  sufficient  land, 


344 


The  Mosaic  Lan'. 


I 


t 


and  farming?  stock  and  implements  to  cultivate  it,  to  fully 
support  a  family,  is  now  exempt  from  execution. 

Possibly  in  this  movement  toward  greafer  liberality, 
we  are  coming  back  to  acknowledge  the  justice  of  the 
Mosaic  law,  with  its  year  of  jubilee,  when  every  debtor 
went  free,  and  every  lavished  estate  in  lands  reverted 
again  to  its  former  owner.  Whether  we  do  recognize  the 
justice  of  it,  we  must  admit  that  t!iis  liberality  toward  the 
debtor  has  been  advantageous  to  the  creditor,  whose 
great  security  after  all  must  be  in  the  disposition  of  the 
debtor  to  pay  him.  Reliance  on  legal  compulsion  to 
enforce  payment,  where  this  is  wanting,  is  almost  useless, 
rarely  producing  any  beneficial  result  for  the  creditor. 

Passing  over  all  that  which  might  or  ought  to  be,  some 
suggestions  will  be  presented,  deemed  appropriate  to 
guide  the  insolvent  debtor  in  his  course  under  the  present 
established  laws  or  rules  of  mercantile  society ;  which 
on  general  principles  is  disposed  to  hold  every  trader 
strictly  accountable  to  pay  what  he  promises,  regardless 
of  any  circumstances  which  may  have  intervened  between 
the  time  of  the  promise  and  the  time  for  payment,  even 
though  it  strips  him  of  his  last  dollar. 

A  retailer  who  fears  that  he  is  in  such  a  position  that 
at  the  end  of  the  current  year,  on  taking  stock  and  bal- 
ancing up  his  books  he  will  be  insolvent,  should  so  care- 
fully conduct  his  business  as  to  give  no  occasion  to  his 
creditors  to  impugn  his  actions,  or  dispute  the  honesty  of 
his  intention  to  pay  if  he  could.  He  ought  so  to  manage 
that  they  have  not  reason  either,  to  believe  that  in  ig- 
norance of  his  position,  he  has  made  their  loss  heavier  than 
it  otherwise  would  have  been ;  and  should  always  bear 
in  mind,  at  such  a  time,  the  great  advantage  it  will  be  to 
him  to  stand  so  well  in  the  opinion  of  his  creditors,  that 
they  will  be  willing  to  entrust  him  to  manage  his  assets 


7%e  Creditor's  Objections  to  a  Compromise,     345 


for  their  benefit,  and  not  be  under  the  necessity  of  making 
an  assis^nment.  His  chance  of  obtainins:  a  favorable  com- 
promise  of  his  debts  will  depend  very  much  upon  his  con- 
duct preliminary  to  his  actual  failure. 

Perhaps  a  recital  of  the  ordinary  objections,  made  by 
creditors  to  accepting  an  offered  compromise,  and  which, 
as  will  be  noticed,  relate  mainly  to  acts  antecedent  to  fail- 
ure, will  bring  more  directly  before  the  reader  the  specific 
matters  to  be  regarded  or  avoided. 

To  give  these  objections  due  prominence,  they  are  pre- 
sented in  order  together,  and  will  be  reverted  to  after- 
ward in  like  order,  and  an  effort  made  to  show  how  each 
objection  may  be  obviated. 

1.  "  He  should  have  stopped  payment  before  he  lost  so 
much,  and  could  then  have  made  a  larger  dividend." 

2.  "  He  should  not  have  made  so  much  confidential  in- 
debtedness." 

3.  "  He  was  clearly  insolvent  a  year  ago,  as  his  own 
accounts  show,  and  should  have  stopped  payment  then, 
when  he  did  not  owe  me  so  much." 

4.  "  Never  sold  him  goods  to  any  amount  before,  and 
have  made  no  money  by  him  as  his  other  creditors  have, 
so  can- not  afford  the  loss  on  that  account." 

5.  "  My  debt  ought  to  have  been  made  confidential." 

6.  "  He  ought  to  have  known  when  he  created  the 
the  debt  that  it  would  not  be  paid  at  maturity,  and  is 
therefore  guilty  of  fraudulently  contracting  it." 

7.  "  He  deceived  me  by  false  statements  of  his  means 
and  ability  to  pay." 

8.  "  Owes  me  more  than  usual,"  or  "more  in  propor- 
tion to  others." 

9.  "  He  has  not  satisfactorily  accounted  for  the  losses 
by  which  he  alleges  he  became  insolvent." 

10.  "Don't  believe  he  can  pay  the  amount  he  proposes, 


346 


jivoidtng  the  Appearance  of  J^raud. 


i' 


and  at  the  subsequent  failure  matters  will  be  still  worse.*' 

11.  "The  time  of  paying  the  compromise  is  too  re^ 
mote.  Would  prefer  something  less  in  shorter  time,  to 
wailing  so  long." 

12.  "  lias  shown  himself  so  unprincipled  since  his  fail- 
ure, that  I  would  not  trust  him  to  settle  up  his  estate." 

These  objections,  as  will  be  noticed,  refer  more  es- 
pecially to  the  peculiar  circumstances  attending  the  in- 
debtedness to  the  individual  creditor.  They  are  specific 
rather  than  general.  Some  of  them  do  not  impute  dis- 
honesty, and  some  of  them  it  may  have  been  impossible 
to  avoid,  at  the  late  period  when  the  dealer  first  realized 
his  insolvent  condition. 

Such  objections  have  not  been  taken  into  consideration, 
as  the  concealing  or  unjust  depreciation  of  assets,  or  the 
makin(>'  of  fictitious  or  nominal  indebtedness,  and  the 
like ;  as  these,  if  charged,  are  equivalent  to  a  charge  of 
actual  dishonesty,  and  if  trne,  must  in  a  great  measure 
prove  the  dealer's  unworthiness  to  have  a  release ;  though 
it  is  a  fact,  that  owing  to  the  whims  and  obstinacy  of 
creditors,  too  many  men  are  found,  who  think  that  the 
only  way  to  secure  a  compromise  settlement  by  an  insol- 
vent, is  to  cover  up  and  hide  everything  from  the  credit- 
ors ;  so  that  they,  fearing  they  will  get  nothing,  may  be 
induced  to  accept  any  offer  which  is  made.  If  the  insol- 
vent disregards  all  idea  of  retaining  the  respect  and  es- 
teem of  his  creditors,  and  looks  only  to  getting  rid  of  the 
legal  liability  to  pay  what  he  owes,  such  a  plan  does 
sometimes  succeed  better  than  where  everything  is  shown 
up  plainly,  and  the  full  reasons  given  for  the  position  ia 
which  the  debtor  is  placed.  But  such  a  course  is  not  com- 
mendable, for  even  when  the  debtor  pays  all  that  he  can, 
and  all  the  prior  circumstances  of  the  failure  are  untinc- 
tured  with  fraud,  it  has  the  appearance  of  wrong,  and 


JT/ia^  an  rnsolveni  may  detain.  347 

should  be  avoided.  The  insolvent  who  compromises  his 
debts  honorably  and  satisfactorily-that  is  as  satisfactorily 
as  creditors  can  ever  be  expected  to  receive  less  than 
100  cents  to  the  dollar  in  ftU  payment-has  not  lost 
eyeiything.  It  sometimes  happens  that  an  event  of  this 
kind  bnngs  out.  for  the  first  time,  the  better  qualities  of  a 
Man,  and  shows  to  himself  that  he  has  greater  ability 
than  he  supposed,  and  to  his  creditors  that  he  has  firmer 

ReTuttrf  r''^  *'""  *'^  ^•''"'•^  S*^*^  ^^  "«<^it  for. 
Keputation  for  honesty  and  business  experience- is  about 
the  only  thing  of  value  that  a  man  who  has  just  comprl 
mised  IS  debts  can  claim  to  possess;  and  he'  shoulZot 
so  lightly  regard  these,  as  to  imperil  them  by  anv  dis- 
mgenuous  and  uncandid  settlement  with  his  creditors. 

Ihough  ,t  may  be  deemed  somewhat  superfluous  to 
make   any  extended  remarks  on  the  creditors'  objections 
presented  on  a  preceding  page,  as  the  most  of  them' expWa 
themselves,  yet  as  this  book  is  more  especially  intended 
Sbtg  ;:^;:'  ^'"  "«  P™P-  ^  ^'^  -P>-t,  at  the  risk 

The  first  o^ection  has  force  when  the  debtor  not  bavin  <. 
soon  enough  comprehended  the  reduced  value  of  his  Z 
sets,  particularly  of  his  "  old  stock  "  and  "  doubtful  d«bts  " 
continues  on  doing  business  at  a  loss  for  six  months"  or'a 
year  or  perhaps  longer  still,  losing  so  much  in  that  period 
that  he  can  only  pay  twenty  or  thirty  per  cent  of  his  in- 
debtedness ;   when,  if  he  had  stopped  payment  a  year 
earher,  when  first  actually  insolvent,  he  could  have  paid  a 
dividend  of  fifty  or  sixty  per  cent.     The  continuance  may 
have  been  from  ignorance  of  his  true  condition,  or  from 
a  disposition  to  postpone  an  evil  to  the  longest  time  pos- 
sible   or  from  a  belief  that  the  losses  before  sustained 
could  be  overcome  by  keeping  on  in  business,  and  pay- 
ment  be  made  m  full  to  everybody.    The  first  two  rea- 


n 


348 


a 


Should  ?iave  Stopped  l^aymenl  Sooner. 


ff 


sons  for  continuing  in  business  are  untenable  and  unsatis* 
factory  to  creditors.  A  dealer  should  not  willfully  re- 
main in  ignorance  of  his  degree  of  responsibility,  when 
in  danger  of  insolvency.  A  wrong  action  done  in  willful 
ignorance  is  just  as  criminal  as  when  done  with  evil  in- 
tention. He  should  have  the  moral  courage  to  take  as 
depreciating  a  view  of  his  assets,  as  the  circumstances  or 
period  demands,  and  if  really  insolvent,  and  there  is  no 
prospect  of  overcoming  tlie  difficulty,  he  should  stop  at 
once,  and  not  go  on  making  things  worse. 

In  a  retail  business  where  the  goods  are  largely  pur- 
chased on  credit,  and  the  sales  are  for  cash,  it  is  very  easy 
for  the  dealer  to  become  badly  insolvent,  without  being 
"  short "  of  money  to  meet  his  payments,  and  this  cir- 
cumstance oftentimes  may  deceive  him,  especially  when 
he  takes  only  an  outside  or  superficial  view  of  his  busi- 
ness. Take,  as  example,  a  dealer  who  keeps  a  stock  of 
$10,000  on  the  average,  and  sells  yearly  $30,000.  With 
$10,000  capital  he  can  of  course  buy  everything  for  cash. 
If  he  should  buy  his  goods  on  four  months  credit,  still  sell- 
ing for  cash,  he  might,  by  a  losing  business,  sink  all  his  capi- 
tal, and  yet  simply  from  his  sales  of  $2,500  a  month  pay 
promptly  all  his  liabilities ;  as  his  indebtedness  would  at 
any  given  time  be  no  more  than  the  sales  for  four 
months.  He  might  go  on  till  he  lost  an  additional  sura 
of  $5,000,  and  be  worth  that  much  less  than  nothing,  and 
by  getting  six  months  credit  on  his  purchases  he  could 
still  pay  promptly  at  maturity.  And  by  purchasing  on  eight 
months  credit — a  not  unusual  credit  a  few  years  ago — he 
could  be  $10,000  behind,  and  yet  meet  his  payments  with- 
out borrowing.  Should  he  stop  payment  at  this  junc- 
ture, he  would  owe  for  eight  months  purchases,  $20,000, 
and  have  but  $10,000  of  stock  to  pay  with.  When,  had 
he  stopped  before  losing  the  last  $5,000,  he  would  have 


;; 


(Reaso7i  for  postponlriff  the  Suspension,       349 

owed  only  $15,000,  and  would  have  the  same  amount  of 
stock  to  make  a  dividend  from.  He  could  as  easily  have 
paid  fifty  per  cent  dividend  at  the  earlier  period  of  insol- 
vency, as  he  could  thirty-seven  and  one-"half  per  cent  at 
the  later  period.  This  cause  for  the  creditor's  objection 
can  be  avoided  by  taking  a  semi-annual  or  annual  ac^ 
count  of  stock,  and  by  keeping  a  running  account  of  pur- 
chases and  sales,  with  an  estimate  of  the  profits,  as  re- 
commended in  Chapter  XVI.  by  which  the  dealer  may 
always  know  very  nearly  his  true  condition  at  the  end  of 
each  month,  and  certainly  at  each  stock-taking. 

The  third  reason  for  continuing  on  in  the  business  after 
the  dealer  is  insolvent — that  of  a  belief  that  the  losses 
are  reparable — may  be  a  satisfactory  one  even  to  a  losing 
creditor.    The  loss  may  have  been  a  peculiar  one,  not 
likely  to  occur  again — as  a  theft,  a  fire,  failure  of  debtors 
under  peculiar  circumstances,  or   other  like  causes.     A 
dealer  who  had  been  prosecuting  a  successful  business  for 
a  series  of  years,  would  be  justified,  when  meeting  with 
such  a  disaster,  in  continuing  on  in  business  when  the  pros- 
pect was  fair  that  he  could  in  a  year  or  two  retrieve  the 
loss.     But  the  chances  ought  to  be  carefully  considered. 
The  dealer  should  endeavor  to  take  the  position  of  a  cred- 
itor,  looking  back   on  them   after  a  failure  has  subse- 
quently occurred.     It  is  useless  to  continue  on  under  such 
circumstances,  if  the  way  is  not  fully  clear.     If  there  is 
doubt  or  hesitation,  the  chances  are  that  further  strug- 
gles will  be  unsuccessful.     The  dealer  is  somewhat  in  the 
position  of  one  caught  in  a  quagmire.     If  he  can  reach 
firm  land  by  a  struggle  or  two,  all  is  well ;  but  if  he  is 
too  far  from  the  solid  ground,  he  will  do  better  to  make 
his  situation  known  by  crying  out  as  speedily  as  possible, 
as  struggling  will  only  sink  him  deeper,  without  reliev- 
ing him. 

80 


ggQ  Cotifidential  :DebL 

When  a  man  in  doubtful  circumstances  of  solvency 
finds  himself  short  of  funds  to  meet  his  payments,  and 
cannot  succeed  in  getting  a  greater  length  of  credit  on 
his  purchases,  he  sometimes  has  recourse  to  borrowmg 
from  his  friends.  Creating  a  debt  of  such  character  that 
in  case  of  failure,  it  must  first  be  paid  out  of  his  assets, 
and  this  gives  cause  for — 

The  second  objection  of  the  creditor. 

The  insolvent,  in  creating  this  character  of  debt,  has 
gone  from  bad  to  worse.     The  most  difficult  obstacle  to 
overcome  in  obtaining  a  compromise,  when  it  exists,  is 
a  large  confidential  indebtedness.     It  is  so  often  used  in 
the  emergency  of  failure  for  a  cover  to  some  means  re- 
served for  the  insolvent's  benefit,  or  to  make  good  the 
loss  of  some  one  or  more  favored  creditors,  that  it  is  al- 
ways looked  on  with  suspicion.     To  show  how  onerously 
a  comparatively  small  confidential  debt  bears  upon  the 
general  creditors,  take  the  case  of  an  insolvent,  as  men- 
tioned  a  couple  of  pages  back;  and  suppose  him  at  the  sec- 
ond  stage  of  downward  progress,  $5,000  behind,  and  buy- 
ing  goods  at  six  months.     Instead  of  obtaining  credit  on 
lonc^er  time,  let  him  make  good  his  deficiencies  in  part 
by  "borrowing  to  the  extent  of  $2,500,  which  it  would 
generally  not  be  difficult  for  him  to  do.     When  he  sus- 
pends  after  losing  the  $5,000  more,  he  would  owe  $2,500 
confidential  and  $17,500  general  indebtedness.     Paying 
the  first  in  full  out  of  the  assets  would  leave,  (countmg 
the  assets  at  the  same  value  as  before,)  only  28^  per  cent 
dividend  for  the  general  creditors,  instead  of  37^,  as  before. 
Doubling  the  amount  of  confidential,  would  reduce  the 
dividend  to  the  general  creditors  to  only  16^  per  cent. 

Confidential  debt  should  always  be  avoided  by  a 
dealer  in  doubtful  circumstances  of  solvency ;  and  if 
it  has  been  considered  necessary  to  create  such  a  debt  in 


T/ie  Creditor's  Thtrd  Objection, 


351 


the  endeavor  to  retrieve  his  position,  it  is  better  to  con- 
tinue on  in  the  business  long  enough  to  pay  up  the  con- 
fidential, under  any  circumstances  not  otherwise  discred- 
itable. Although  the  result  is  the  same  to  the  general 
creditors,  the  confidential  debt  is  not  present  in  the  sched- 
ule to  prejudice  their  minds. 

The  third  objection— that  of  a  change  increasing  the 
amount  of  indebtedness  unfavorably  to  the  creditor,  since 
actual  insolvency,  is  one  difficult  to  overcome.  A  credi- 
tor, who,  on  looking  over  the  accounts  of  an  insolvent 
debtor,  finds  that  his  own  claim  is  much  larger  in  com- 
parison with  other  creditors,  than  it  was  at  some  prior 
period  when  the  debtor  was  also  insolvent,  is  ordinarily 
very  unwilling  to  accept  any  ofiered  compromise,  till  he 
is  put  on  an  equality  with  the  other  creditors,  by  the  pay- 
ment in  full  of  so  much  of  his  claim  as  is  in  excess  of  the 
former  proportion.  Nor  will  it  obviate  the  objection  that 
the  increased  amount  was  made  at  the  urgent  solicitation 
of  the  creditor,  although  that  is  always  a  mitigating  cir- 
cumstance. The  creditor  may  not  be  able  to  impugn  the 
the  motive  of  the  insolvent  in  the  increase  of  the  debt, 
but  he  will  feel  the  increased  loss  just  as  keenly. 

A  dealer,  knowing  himself  in  such  doubtful  position, 
should,  therefore,  be  careful  not  to  unduly  increase  the 
amount  of  bis  indebtedness  with  any  one  creditor.  It  is 
not  enough  for  him  to  show  that  he  has  not  increased  the 
ao-o-regate  of  indebtedness  in  contemplation  of  failure. 
This  is  not  the  point  of  objection.  From  the  time  when 
the  debtor  is  in  doubt  of  his  solvency,  he  ought  to  regard 
himself  as  acting  not  only  for  himself,  but  as  a  trustee 
for  his  creditors— that  is,  for  each  individual  one,  as  well 
as  for  the  whole  body  of  them.  He  should  so  manage 
that  the  interest  of  any  one  or  more  of  them  is  not  sacri- 
ficed for  the  benefit  of  the  others,  which  is  done  when 


352 


J^qualizing  the  Loss. 


4'\ 


one's  account  is  reduced  materially  and  another's  increased. 
When  he  has  actually  failed,  he  can  not  satisfy  those  whose 
claims  are  increased  by  balancing  off  against  them  others 
whose  claims  are  decreased.  These  may,  it  is  true,  m'ore 
cheerfully  give  the  aid  of  their  influence  in  his  efforts  to 
obtain  a  compromise  ;  but  they  are  very  prone  to  ascribe 
their  advantaseous  position  among  the  creditors  to  their 
own  discernment,  which  "  saw  signs  of  his  failure,  and 
managed  to  reduce  the  amount  of  his  indebtedness  to 
them,"  rather  than  to  any  favor  or  simple-mindedness  of 

the  insolvent. 

There  are  often  premonitory  signs  of  coming  failure, 
that  shrewd   creditors   can  see,  which  induces  them  to 
refuse  a  continuance  of  credit.     Such   refusals   are   fre- 
quently  the  alleged  reason  for  increasing  accounts  in  other 
houses,  or  for  opening  new  credits.     It  would  be  better 
policy,  in  view  of  the  probability  of  failure,  and  certainly 
more"  honest  if  there  is  any  doubt  of  ability  to  pay  in 
full,  to  refrain  from  purchasing  except  from  those  who 
are 'already  creditors.  Refusals  of  this  character  are  conta- 
gious,  quickly   running  from   one   creditor   to   another. 
And  it  is  particularly  incumbent  on  a  dealer,  when  so  re- 
fused by  any  former  creditor,  to  carefully  review  his  po- 
sition and  be  quite  certain  that  he  can  get  out  of  his  diffi- 
culty, paying  not  only  his  indebtedness  in  the  old  houses, 
but  in  such  new  ones  also,  as  he  may  open  accounts  in ; 
and  this,  too,  even  though  he  should  be  refused  by  a  large 
number  of  his  old  creditors.    If  he  can  not  be  sure  of 
this,  it  is  better  for  him  to  stop  payment  at  once,  even 
though  he  may  think  he  will  only  need  an  extension  of 
time  in  which  to  make  his  payments.     By  going  on  at 
this  time,  and  opening  accounts  in  new  houses,  should  his 
expectations  not  be  realized,  and  he  be  compelled  to  fail, 
these  new  creditors  will  raise — 


''  T?ie  Debt  Oiigkl  to  tiape  been  Confidential,"  353^ 

The  fourth  objection — That  never  having  made  any 
thing  of  moment  in  their  dealings  with  him,  they  cannot 
afford  to  lose  by  accepting  his  compromise  offer,  and  re- 
leasing him.  It  is  very  difficult,  too,  to  avoid  the  impu- 
tation of  intentionally  contracting  a  debt  without  the 
intention  to  pay,  when  a  dealer  asks  a  compromise  on 
the  first  or  second  purchase  he  makes  from  a  party.  This 
imputation  should  be  rendered  less  possible,  by  not  open- 
ing accounts  in  new  houses  when  in  danger  of  failing. 

—  The  business  world  divides  promises  to  pay  into  two 
classes :  One  the  ordinary  business  promise  of  a  note,  or 
debt  for  the  purchase  of  goods,  which  is  to  be  performed 
if  the  promisor  possibly  can,  and  a  more  obligatory  pro- 
mise, known  as  a  confidential  one,  wherein  the  promisor 
has  specially  pledged  himself;  and  which  there  is  such  a 
higher  obligation  to  pay,  that  it  takes  precedence  of  the 
other,  and  is  not  to  be  compromised. 

The  first  obligation  seems  to  rest  for  payment  on  the 
promisor's  ability,  the  second  on  his  honesty. 

Some  obligations  or  debts  are  of  such  a  character  that 
by  common  usage  they  are  regarded  as  confidential,  or  at 
least  as  having  preference  in  payment  over  ordinary  debts 
for  goods :  such  as  those  for  borrowed  money,  for  money 
held  in  trust  as  guardian,  executor,  etc.,  or  which  a  third 
party  would  have  to  pay  as  endorser  or  bondsman  who 
had  received  no  compensation  for  the  liability,  and  in  gen- 
eral obligations  to  any  one  who  has  become  a  creditor  at 
the  solicitation  of  the  debtor  and  without  profit  to  him- 
self. When,  in  case  of  failure,  such  debts  are  sought  to 
be  compromised  the  debtor  meets  with — 

The  fifth  objection — that  the  debt  ought  to  have  been 
made  confidential.  When  there  is  a  promise,  or  when 
the  debt  is  of  the  character  above  described,  there  is  no 
e^icuse  available  for  bringing  it  in  the  same  category  with 


354  Avoiding  Confidential  Implications, 

ordinary  debts,  and  seeking  to  compromise  it.     All  such 
obligations  should  be  provided  for  first,  and  if  possible 

before  failure. 

■  Creditors  are  always  desirous  of   bringing  their  debts 
into  this  class,  to  secure  their  payment,  hence  it  is  well 
for  the  dealer  to  be  on  his  guard  about  inadvertantly 
making  sucii  promises.     It  does  not  need  express  words  of 
promise  to  create  an  expectation— or  rather  a  claim  by  a 
creditor  that  an  ordinary  debt  is  to  be  regarded  as  con- 
fidential by  the   debtor.    Vague   remarks  made   at  the 
time   of  the   creation  of  the  debt,  or  subsequently,  are 
often   sufficient:  such  as  telling  a  creditor  with  whom 
there  is  a  running  account  which  he  regards  as  too  large, 
or  is  disinclined  to  increase,  that  "  it  will  be  all  right ;  I 
will  pay  you,  no  matter  what  happens,"  or  "  you  need  have 
no  fear  of  losing  anything  by  an  old  friend  like  me."     In 
this  way  the  expectation  is  raised  that  the  debt  will  be 
considered  confidential ;  while  thie  debtor  has  no  hesita- 
tion in  making  similar  remarks  to  every  creditor  he  has. 
It  is  quite  common  to  hear  the  creditor  of  some  retailer 
who  is  known  to  the  trade  to  be   in   doubtful   circum- 
stances, say,  "  I  do  not  fear  losing  anything  by  him,  he  is 
a  particular  friend  of  mine,"  or  "  we  have  an  understand- 
ing about  that  debt,  that  it  is  to  be  confidential."     And 
this  though  no  promise,  has  been  made  to  that   efi"ect. 
Sometimes  the  implication  is  by  silently  assenting  to  some 
remark  or  proposition  of  the  creditor.     A  common  one  is 
when  the  creditor  gives  a  certain  limit  to  the  amount  he 
will  trust  the  dealer  with,  as  an  ordinary  debt,  saying, 
"  if  you  buy  more  than  that  you  must  consider  it  confi- 
dential."    Though  the  debtor  makes  no  actual  promise 
that  he  will,  yet  when  he  goes  on  season  after  season, 
buying  largely  beyond  the  limit,  and  paying  regularly 
until  a  failure  occurs,  the  creditor  claims  that  all  the  debt 


: 


^ehts  which  are  of  Uncertain  Class,         855 

over  the  amount  named  as  a  limit,  perhaps  two  or  three 
years  before,  shall  be  regarded  as  confidential. 

It  will  be  readily  seen  that  the  impression  by  a  credi- 
tor, that  any  considerable  portion  of  his  claim  ought  to 
have  been  made  confidential,  will  be  a  serious  objection 
to  his  acceptance  of  a  compromise,  and  a  dealer  should 
always  be  careful  about  saying  anything  which  can  be 
construed  into  a  promise  of  this  character,  when  not  in- 
tended ;  and  also,  that  there  is  nothing  in  the  nature  of 
the  transaction  itself  from  which  the  <jreditor  can  with 
any  propriety  claim  that  the  debt  is  of  a  confidential 
character. 

There  are  some  accounts,  the  position  of  which,  in  this 
respect,  is  not  precisely  determined.  The  creditor  hold- 
ing them  claiming  that  they  should  be  confidential ;  while 
if  they  are  so  made  the  other  creditors  object,  and  the 
insolvent  is  in  doubt  what  course  to  pursue.  Some  such 
are  debts  created  for  the  support  and  maintenance  of  the 
dealer  and  his  family,  that  are  ordinarily  paid  at  short 
intervals,  and  before  they  amount  to  much,  but  which 
are  sometimes,  with  a  desire  to  turn  all  the  receipts 
into  the  business,  allowed  to  run  on  till  they  make 
quite  an  item.  Ordinarily,  however,  this  class  do  not 
amount  to  enough  to  make  any  perceptible  difference  in 
the  dividend  to  the  general  creditor.  If  they  do,  it  is 
better  to  pay  them  off  before  actual  failure,  even  if  the 
money  has  to  be  borrowed  and  that  made  confidential. 
A  censurable  act  done  will  commonly  meet  with  less  ob- 
jection than  the  same  act  contemplated. 

Another  class  of  such  accounts  is  overdue  claims. 
Among  large  dealers  a  request  to  hold  over  a  note  is  gen- 
erally regarded  as  equivalent  to  borrowing  the  money, 
f  nd  except  when  done  with  an  admission  of  insolvency, 
the  amount  is  mutually  held  as  confidential.    But  it  is 


356 


The  Creditor's  Sixth  Objection, 


The  Creditor's  Seve7ith  Objection, 


857 


doubtfal  whether,  in  case  of  subsequent  failure,  the  other 
creditors  of  the  debtor  would  assent  to  his  placing  such  a- 
debt  in  the  list  of  confidential,  simply  on  this  account. 
Other  forms  of  overdue  debt  have  still  less  of  this  con- 
fidential character.     But  all  of  it,  of  whatever  character, 
when  sought  to  be  compromised,  is  open  to  the  objection 
that  it  ought  to  have  been  confidential.    More  especially  is 
this  objection  made  when  the  grace  given  by  the  creditor 
has  been  granted  at  the  request  of  the  debtor,  who  has 
gone  on  to  pay  other  creditors,  to  the  loss  ultimately  of 
the  lenient  creditor.    The  insolvent  may  overcome  this 
objection  by  showing  satisfactorily— when  the  circum- 
stances admit  of  it— that  nothing  has  been  lost  by  the 
leniency;   that  those   creditors  who   were  paid    subse- 
quently were  either  confidential  ones,  or  those  from  whom 
the  debtor  was  purchasing  goods,  so  that  the  average 
of  indebtedness  was  not  reduced  thereby. 

The  nxth  objection— leads  us  to  consider  the  different 
opinions  which  men  may  entertain  of  the  same  subject  as 
they  view  it  from  different  positions.     To  the  debtor  his 
assets  looked  favorable— his  prospects  brightening,  and 
he  went  into  the  market,  therefore,  to  purchase  goods 
and  contract  debts,  with  a  conscientious  belief  in  his  sol- 
vency ;  while  his  creditor,  looking  over  the  same  assets, 
and  the  transactions  as  they  occurred,  is  free  to  say  that 
no  man,  when  in  such  a  position,  could  have  honestly 
thought  that  he  would  De  able  to  meet  his  engagements. 
This  objection  can  only  be  obviated,  therefore,  by  that 
general  prudence  heretofore  dwelt  upon,  as  necessary  m 
deciding  when  it  is  no  longer  probable  that  further  efforts 
in  business  will  be  crowned  with  success.     And  in  all 
cases  of  doubt,  it  would  be  well  to  consider  how  far  the 
reasons,  which  to  the  dealer  appear  satisfactory  for  con- 
tinuing the  business,  may  serve  to  satisfy  a  creditor  tnat 


he  has  acted  honestly,  if  in  the  end  he  is  unsuccessful. 

The  seventh  objection  is  related  to  the  sixth,  but  goes 
a  step  further.  The  debtor  has  not  only  been  influ- 
enced by  his  erroneous  views,  but  has  so  impressed  such 
views  on  the  creditor,  misleading  him  as  to  his  true  con- 
dition, that  he  has  been  induced  to  sell  him  goods  on 
credit,  when  if  the  facts  bad  been  told  the  credit  would 
have  been  withheld. 

There  are  many  degrees  of  guilt  in  making  false  pre- 
tences. The  law  in  respect  to  them  is  not  very  sensi- 
tive, the  maxim  caveat  venditor — let  the  seller  beware — 
generally  prevailing,  and  the  party  accepting  the  repre- 
sentations of  another  as  to  any  assets  or  property  which 
he  may  have,  -which  is  to  seiwe  as  the  foundation  for  a 
credit,  and  which  there  is  a  fair  opportunity  for  a  per- 
sonal examination,  can  rarely  hold  him  legally  respon- 
sible for  exaggerating  their  value.  The  question  is  not, 
however,  how  far  a  person  could  go  in  exaggerating  his 
means,  when  soliciting  credit,  and  escape  legal  punishment, 
but  how  far  he  can  go  without  injuring  his  reputation 
among  his  creditors  as  an  upright  man,  when,  in  case  of 
subsequent  failure,  he  has  to  come  before  them  to  obtain 
a  compromise.  A  dealer  who  is  required  to  make  a  state- 
ment of  his  business  affairs  to  obtain  credit,  should  in 
prudence,  refer  to  the  darker  side  of  his  condition,  as  well 
as  to  the  bright  side,  particularly  when  in  weakened  cir- 
cumstances. It  is  never  a  safe  statement  for  a  dealer  to 
make,  to  say  that  he  is  worth  any  given  sum  of  dol- 
lars. His  balance  sheet  may  show  that  he  is  worth  that 
much,  at  his  valuation  of  his  assets.  But  there  is  often  a 
great  difference  between  his  estimate  of  their  value  and 
what  they  would  sell  for  in  time  to  make  payment  of  his 
ordinary  mercantile  liabilities. 

An  old  stock  of  goods,  long-standing  or  doubtful  ac- 


\ 


358   deceit  in  Making  JExaggerated  Statements, 

counts,  and  real  estate  at  fancy  prices,  can  make  a  very  fair 
show  of  assets  on  a  "  balance  sheet,"  but  when  these  are 
put  into  the  crucible  of  insolvency  and  melted  down,  they 
are  often  in  great  part  mere  dross ;  the  actual  precious 
metal  often  being  not  more  than  one-half  to  two-thirds  of 
what  they  were  counted  at.  While  the  indebtedness  which 
is  to  be  paid,  is  a  specific  sum,  which  does  not  decrease, 
but  on  the  contrary,  if  any  way  deferred  by  borrowing 
or  extending,  increases  with  the  interest  that  accrues. 
Hence  it  is  more  prudent  to  say,  my  "  balance  sheet "  shows 
a  capital  of  so  many  dollars  or  what  is  better  still,  to 
give  the  specific  amounts  of  each  item  of  assets,  and 
the  amount  of  indebtedness,  leaving  the  creditor  to 
make  such  allowances  from  the  nominal  value  as  his  own 
experience  may  suggest.  An  honest  statement  of  this 
kind,  if  after  a  failure  its  truth  should  be  doubted,  may 
always  be  verified  by  the  production  of  the  dealer's  in- 
ventory and  account  books. 

This  course  may  require  some  moral  courage  on  the 
dealer's  part,  when  he  seeks  for  credit,  kno\ring  that  his 
position  is  weak,  and  yet  believing  himself  strong  enough 
to  pay  any  debt  he  may  incur,  and  that  therefore  no  real 
harm  will  come  to  his  creditors  by  a  little  exaggeration 
of  his  ability.  None  of  us  like  to  be  refused  credit,  and 
yet  many  worse  things  might  happen  to  a  retailer  then  a 
simple  refusal  of  credit.  The  criticisms  of  another,  and 
probably  more  experienced  merchant,  on  the  danger- 
ous points  of  a  retailer's  business,  as  it  is  thus  brought 
confidentially  before  him  for  the  purpose  of  obtaining 
credit,  may  often  place  his  business  in  such  a  new  light 
that  he  is  led  to  see  errors  and  mistakes  in  his  system, 
which  he  can  subsequently  correct,  much  to  his  advan- 
tage. Especially  is  this  advice  beneficial  when  the  credit 
is  refused,  for  the  refusal  is  evidence  of  sincerity,  and  it 


The  Creditor's  Wghth  Objection, 


359 


should  be  doubly  effective  in  influencing  the  applicant  to 
a  more  careful  investigation  of  whatever  may  have  been 
found  objectionable,  and  more  earnest  efforts  to  overcome 
the  deficiencv. 

Tlie  eigJith  objection  is  a  very  common  one.  It  has 
nearly  the  same  point  in  it  as  the  third  objection ;  and 
there  is  no  occasion  to  further  amplify  the  subject.  The 
only  difference  in  the  two  is,  that  aside  from  what  the  po- 
sition may  have  been  a  year  ago  or  more,  when  the  re- 
tailer first  became  of  doubtful  solvency,  that  now,  at 
least,  there  is  not  a  fair  and  equitable  distribution  of  the 
loss  among  those  the  insolvent  has  been  dealing  with.  The 
creditor  may  be  quite  willing  to  take  his  share  of  the 
loss,  but  he  does  not  want  to  bear  any  more  than  his 
share.  This  is  a  point  that  the  dealer  should  endeavor  to 
guard  against,  if  possible,  even  when  on  the  verge  of 
failing,  so  that  none  of  his  creditors  suffer  an  undue  pro- 
portion of  loss  by  his  failure.  Xot  by  increasing  the 
accounts  of  those  that  are  below  the  average,  but  by 
reducing  in  part  those  that  are  above  the  average. 

The  ninth  objection  is  made  most  frequently  when  cor- 
rect and  detailed  books  of  account  have  not  been  kept  by 
the  insolvent.  He  has  taken  account  of  stock,  as  usual, 
and  finds  instead  of  his  expected  surplus,  that  there  is  a 
deficiency  of  assets  to  meet  his  liabilities.  When  asked 
to  account  for  the  deficiency,  he  is  unable  to  do  so.  "  He 
thinks  his  clerks  robbed  liim,"  or  "  his  goods  must  have 
been  taken  by  shop-lifters,"  or  "  he  must  have  sold  goods 
at  too  little  profit,"  or  some  similar  excuse,  which  he  can 
give  no  reason  for  believing  himself,  and  which  his  credi- 
tors will  generally  think  is  but  a  lame  attempt  to  account 
for  the  absence  of  assets  which  have  been  reserved  by 
the  debtor. 

The  advantage  of  keeping  a  running  account  of  sales, 


360 


The  Creditor's  Tenth  Objection. 


Short  Time  Compromises. 


361 


I   I 


profits  and  expenses,  so  that  the  dealer  may  be  able 
to  account  in  a  proper  manner  for  the  loss  of  any  large 
amount  of  his  assets,  as  advised  in  the  chapter  on  keep- 
ing accounts,  may  now  be  seen  if  not  before  apparent.  He 
who  can  not  reasonably  account  for  the  losses  which  have 
caused  his  insolvency,  can  scarcely  expect  that  his  credi-  . 
tors  will  have  enough  confidence  in  his  ability  to  allow 
hira  to  settle  up  his  own  estate,  but  will  prefer  that  his 
affairs  shad  go  into  the  hands  of  an  assignee,  as  likely  to 
realize  more  from  the  estate  than  he  would.  And  he  can 
certainly  have  no  hope  that  they  will  want  him  for  a  cus- 
tomer after  he  has  compromised  his  debts ;  the  desire  for 
which  is  sometimes,  in  part,  the  inducement  for  a  creditor 
to  accept  a  compromise,  which  leaves  a  large  surplus  in 
the  hands  of  the  debtor. 

The  tenth  objection  is  made  when  an  insolvent  endeav- 
ors to  compromise  his  debts  without  giving  security  that 
the  proposed  amount  will  be. paid.  The  creditor  fears  to 
accept  and  extend  his  claim,  as  he  generally  must  do,  lest 
at  the  maturity  of  the  compromise  the  debtor  will  not  only 
be  unable  to  pay  it,  but  will  be  in  a  worse  position  than 

at  first. 

Some  insolvent  debtors  start  out  with  the  idea  that 
creditors  will  not  accept  a  compromise,  which  is  not  a 
great  deal  better  than  could  be  realized  out  of  the  assets 
by  an  assignment,  and  hence  much  underrate  the  value  of 
their  assets.  While  proposing  to  pay,  say  fifty  per  cent, 
they  show  a  schedule  of  assets  which  at  the  valuation 
placed  on  them,  will  only  pay  twenty-five  or  thirty  per 
cent.  As  it  is  not  apparent  where  the  fifty  per  cent  is  to 
come  from,  the  creditor  is  disposed  to  regard  the  whole 
thing  as  a  device  by  which  the  debtor  is  to  continue  for 
a  few  months  longer  in  posession  of  his  assets,  so  that  he 
may  manage  them  to  suit  some  sinister  and  selfish  design, 


which  the  precipitation  of  his  failure  had  left  no  time  to 
provide  for.  A  fair  and  candid  exhibit  of  the  insolvent's 
reliances  is  therefore  less  likely  to  elicit  this  objection. 
When  the  objection  seems  sincerely  entertained,  and  can 
not  be  overcome  by  any  explanations  the  insolvent  can 
make,  the  simplest,  and  generally  readiest  way  of  meet- 
ing it,  is  by  offering  a  reduced  percentage  to  the  object- 
ing creditor  with  security,  provided  it  can  be  done  with 
out  injustice  to  the  other  creditors. 

The  eleventh  objection  is  made  when  the  debtor,  with  a 
desire  to  make  his  dividend  look  as  large  as  possible 
y.roposes,  instead  of  a  smaller  amount  on  short  time,  to 
pay  a  larger  sum  on  long  time.  Ordinarily  short  time 
compromises  are  much  more  readily  obtained  than  long 
lime  ones.  When  no  security  is  given,  the  difference 
in  rate  between  the  two  may  fairly  be  estimated  at  two 
per  cent  a  month  for  the  difference  in  time.  That  is, 
practically,  that  an  offer  of  fifty  per  cent  at  an  average  of 
twelve  months  time,  could  be  readily  commuted  to  forty- 
four  per  cent  at  six  months,  and  the  latter  would  gener- 
ally be  preferred.  When  security  is  given,  the  difference  is 
much  less,  and  depends  somewhat  on  the  completeness 
and  availability  of  the  security.  It  will  always  be  found, 
in  practice,  greater  than  the  current  rate  of  interest  in  the 
business  circle,  of  the  particular  locality.  In  1857  a  sus- 
pended house  offered  to  their  creditors  the  following  op- 
tion. They  would  pay  in  full  at  one,  two,  three  and  four 
years,  or  would  pay  seventy-five  per  cent  in  six,  twelve 
and  eighteen  months,  or  give  endorsed  paper  for  sixty  per 
cent  at  three,  six,  nine  and  twelve  months,  or  fifty  per 
cent  cash  paid  down.  The  greater  portion  of  their  credi- 
tors preferred  the  fifty  and  sixty  per  cent  offers. 

Some  length  of  time  is  necessary  to  enable  the  insolvent 
to  dispose   of  his  assets   to  the  best  advantage,  but  in 

81 


362      "  Making  it  Worse  for  the  Creditors.", 

secnrmg  this,  it  is  always  necessary  to  ^-f  /"^-^^ 
^  lengthened  time  will  embarrass  the  chance  of  obtaiu 
fn^W     c^elitors'  consent  to  his  offer.    When  he  s^^ 
ou't  with  the  intent  to  pay  them  some  -t-n  -«.  bn 
wants  a  length  of  time  that  probably  many  of  them  will 
Tt  consent  to  give,  he  may  find  it  harder  afterward  to 
^olLe  them  that  if  he  is  to  pay  his  comprom.se  ^n  the 
Bhorter  time,  it  must  be  reduced  m   amount   so  as  to 
Sv    him  m;rgin  enough  to  make  greater  B-fio.s  than 
L  had  calculated  on,  than  it  would  to  mduce  then^^o 
accept  the  reduced  amount  at  shorter  time,  an  the  fi.st 

'"?r7'..VeA  o^eciion  most  frequently  arises  when  the 
debtor  having  made  what  he  deems  ---";*; 
get  his  creditors  to  accept  his  compromise  ^v  hout  ava.l 
Lt,  discoura-ed  by  the  rebuffs  he  meets  with,  and  be 
!  minrsom::d  towLs  some  of  them,  talks  of  domg  ce. 

Z  things  "which  will  make  ''  --«    ^^  ;«,';^'j;t 
through  which  they  are  to  get  nothmg  if  they  still  retuse 

his  offers.  „i,„  oMheir  fail u'-c  were  honestly 

Therearemany  men,  whoattneniaiiu.i,  j 

desirous  of  paying  all  that  their  estate  would  realize,  for 
the  sake  of  oltafning  a  release,  but   who  were  turned 
to  SueLtoo  easUy  doubtless-by  the  refusa    of  a 
few  of  tlieir  creditors  to  accept  their  proposition.    Havmg 
iUlated  very  closely,  they  had  no  margin    and  saw  no 
way   of  making   up  the  extra  amount  which  the  tew 
^tisfied  ones°recuired.     Seeing  therefore  no  pro^pec 
^f  a  release    they  became  regardless  of  the  interests  oi 
1  ose      en    f  their  creditors  who  were  willing  to  aecep 
Wr  offer,  and  arranged  their  matters  so  that  as  liU^e 
went  into  the  hands  of  their  creditors  as  possible.    En- 
reTvoril'-  to  justify  themselves  by  saying  that  they  had 
Sed  to  pai  all  they  could,  and  as  their  creditors  did 


JVever  Despair. 


363 


not  see  fit  to  accept  it,  they  would  give  themselves  no 
further  trouble  about  the  settlement.  There  is  neither 
honesty  nor  good  policy  in  this  course,  though  many  adopt 
it  to  their  subsequent  sorrow.  If  the  insolvent  would  only 
reflect  upon  how  often  he  has  toiled  and  striven,  and  ex- 
hausted himself  and  the  patience  and  forbearance  of  his 
friends  and  acquaintances  almost,  in  his  efforts  to  meet 
his  obligations  day  by  day  before  his  failure,  and  upon 
how  well  he  got  over  the  '*  hard  places "  in  his  career, 
he  would  not  so  soon  sit  down  in  despair,  or  so  readily 
turn  rogue,  because  some  of  his  creditors  want  him  to 
pay  five  or  ten  per  cent  more  out  of  his  assets  than  he  has 
calculated. 

Courage  and  energy  at  such  junctures  are  all-important. 
If  the  insolvent's  own  influence  is  insuflacient  to  get  the 
consent  of  his  creditors,  let  him  rally  his  friends  to  his 
aid.  He  should  study  the  character  of  the  creditor,  and 
find  out  the  influences  that  move  him.  There  is  always 
a  wire  which  controls  every  man ;  only  get  hold  of  the 
end  of  it.  Do  anything  rather  than  despair.  Above 
all,  let  him  avoid  the  idea  that  his  creditors  are  unfriendly, 
and  that  he  must  fight  them.  This  leads  to  deception, 
and  deception  to  roguery,  and  then  this  objection  comes 
with  such  force  as  to  forbid  all  hope  of  a  release. 

When  an  insolvent  has  so  fairly  and  honestly  conducted 
his  business,  both  before  and  after  failure,  that  his  credi- 
tors can  not  justly  make  any  of  the  foregoing  objec- 
tions, he  may  pretty  confidently  rely  on  getting  a  com- 
promise, if  he  fully  and  fairly  shows  his  position ;  and 
offers  to  pay  all  that  the  creditors  could  themselves  real- 
ize from  the  assets  through  an  assignment. 

If  pressed  by  suits,  which  are  sometimes  commenced 
when  unnecessary  delay  is  made  in  coming  forward  with 
some  proposition  of  settlement,  it  is  essential  to  make 


364 


'Taking  Counsel  of  Creditors, 


timely  provision  by  assignment  or  otherwise,  bo  that  the 
debts  sued  do  not  become,  through  judgment  and  execu- 
tion, liens  on  the  assets,  to  the  disadvantage  of  other  credi- 
tors. It  need  not  follow  that  because  an  assignment  is 
made,  and  the  control  of  the  assets  has  passed  out  of  the 
insolvent's  hands,  that  he  cease  his  efforts  and  give  up  all 
hope  of  a  compromise  settlement.  Even  if  on  account  of 
the  assignment  the  debtor  can  only  offer  a  reduced  rate 
from  what  he  has  before  offered  or  spoken  of,  it  is  still 
worth  while  to  persevere. 

It  is  a  very  usual  occurrence  for  an  insolvent  to  go  to 
his  creditors  and  take  counsel  of  them  as  to  what  he  should 
do,  both  at  the  outset  of  his  trouble,  and  later  at  any  time 
of 'impending   difficulty.    This  is  very  proper;   indeed, 
after  a  debtor's  failure  he  is  but  little  more  than  the  cus- 
todian of  other  men's  property,  and  he  does  well  to  con- 
sult with  them  as  to  its  disposition.     But  he  should  not 
forcret  that  he  must  manage  the  estate  for  the  good  of 
each  and  all,  and  not  only  for  those  who  have  been  lib- 
eral  towards  him,  as  he  will  be  tempted  to  do.    Particu- 
larly  should  this  not  be  forgotten,  when  he  is  pressed  by 
law  suits,  and  his  process  of  settlement  has  been  linger- 
iug  and  protracted,  until  he  has  become  discouraged  in 
trying   to   effect  a  settlement.     Those  of  his  creditors 
who  have  been  most  lenient  and  kind  to  him,  seeing  now 
that  he  is  not  likely  to  succeed  in  obtaining  a  compromise, 
and  that  his  business  must  be  broken  up,  will  think  that 
they  may  as  well  have  their  claims  secured  as  not.    And 
their  advice  will  now  often  be  of  a  character  that  looks 
more  to  their  own  interest  than  to  his.    Through  such  ad- 
vice assignments   are   sometimes  hastily  made-,  and  the 
claims  of  the  friendly  creditors,  with  whom  the  debtor  has 
specially  advised,  are  made  confidential  for  the  full  amount, 
though  they  had  before  agreed  to  accept  a  compromise ; 


Zah^^ers  as  Advisers, 


365 


J  avingout  at  the  same  time  many  others  who  were  Trill- 
ing to  accept  the  compromise,  wlio  will  under  the  assign- 
tnent  get  nothing.     There  is  generally  some  verbal  prom- 
ise made  to  the  debtor  of  future  assistance,  the  paying 
back  of  the  difference  when  he  can  get  a  settlement,  or  a 
good  situation ;  or  the  debtor  may  rely  on  the  hope  that 
when  the  assignment  is  made,  the  non-assenting  creditors 
will   conclude   to   accept   his   offer,  in  which  case  it  is 
understood  that  the  assignment  is  to  be  revoked.     But 
all  these  things  are  apt  to  turn  out  illusive,  and  it  is  very 
rarely  that  such  an  assignment  is  found   satisfactory  to 
the  assignor  in  the  end. 

While,  therefore,  it  is  right  and  proper  for  an  insolvent 
to  consult  freely  with  his  creditors,  it  is  not  wise  for  him 
to  put  himself  too  completely  in  the  hands  of  any  two  or 
three  of  them.  He  should  carefully  consider  their  ad- 
vice, and  follow  only  that  which  his  judgment  tells  him  is 
fair  and  honest  towards  the  other  creditors. 

Lawyers  generally  are  not  good  advisers  as  to  the  dis- 
position an  insolvent  ought  to  make  of  his  assets  among 
his  creditors  when  he  finds  himself  under  the  necessity 
of  making  an  assignment.     As  a  class  they  are  not  of  a 
compromising  character.     Everything  goes  according  to 
law  with  them.     The  creditor  either  gets  all  or  nothing, 
and  the  debtor  either  pays  in  full  with  interest  and  costs,' 
or  remains  in  debt  with  the  judgment  eternally  hanging 
over  him— unless,  indeed,  he  can  plead  usury,  infancy, 
statute  of  limitations  or  other  legal  absolution,  or  obtain 
the  benefit  of  some  bankrupt  law.     Compromising  debts 
and  differences  obviates  the  necessity  for  legal  proceed- 
ings, hence  it  is  not   strange  that  those  that*' make  their 
living  by  such  proceedings  have  no  relish  for  amicable 
settlements.  ♦ 

The  best  advisers  in  such  circumstances  are  fellow  mer 


Sptitting  Hairs  Zepaliy, 


367 


366 


Treparatians  for  £Jmergencies, 


chants  of  experience  and  uprightness,  who  have  no  pecu- 
niary  interest  in  the  insolvent  to  bias  their  judgment. 
These  are  found  in  almost  every  village,  who,  if  consulted 
on  any  point  of  doubtful  policy  or  honesty,  can  readily 
tell  how  it  will  be  regarded  by  those  it  affects. 

It  is  well  for  an  insolvent  to  be  prepared  for  any  emer- 
gency, by  a  due  consideration  of  every  position  In  which 
he  is'likely  to  be  placed  by  any  legal  proceedings  which 
may  be  taken  by  his  creditors  ;  so  that  in  the  excitement 
of  the  occasion  he  may  know  just  what  to  do,  and  not 
have  cause  to  reproach  himself  afterwards  for  any  omis- 
sion  to   do   what   was   necessary.    In  these   fast  times 
when  injunctions  and  attachments  are  so  liberally  issued, 
it  is  highly  necessary  for  the  debtor  in  failing  circum- 
stances'to  guard  against  the  danger  of  having  his  assets 
suddenly  taken  out  of  his  hands,  or  so  tied  up  by  the 
action  of  a  single  creditor  that  he  cannot  use  them.     He 
should  take  legal  advice  and  have  a  well-digested  plan  in 
his  mind,  upon  which  to  act,  and  not  rely  too  blindly  on 
the  forbearance  of  his  creditors. 

A  friend  of  mine  had  a  customer  doing  business  in  New 
York  city,  and  living  out  of  the  State,  but  going  in  and 
out  daily  to  his  business,  who  failed.     Pending  the  neces- 
sary investigations,  to  ascertain  the   amount  the  assets 
would  pay,  my  friend  felt  some  anxiety,  being  himself  a 
creditor,  lest  some  one  should  attach  the  insolvent's  pro- 
perty on  the  ground  of  his  being  anon-resident.     So  step- 
ping into  his  lawyer's  office,  he  stated  the  case  to  him,  put- 
ting it,  however,  in  the  practical  form  as  to  whether  he 
could  not  get  an  attachment  issued.  "  Certainly,  certainly," 
answered  the  lawyer,  "  I'll  make  out   the  papers  in  half 
an  hour  and  secure  your  claim." 

"  Well,  I  am  glad  to  know  it ;  my  claim  is  not  very 
large,  but  I  feel  some  interest  in  the  debtor.    I  will  go 


and  tell  him  he  is  liable  to  have  his  goods  attached, 
and  he  must  make  an  assignment  at  once,  so  as  to  protect 
his  creditors." 

"  Well,  on  second  thought,"  replied  the  lawyer,  "  I  do 
not  think  that  is  necessary.  If  .any  of  your  friend's  cred- 
itors should  try  it,  let  him  come  and  see  me ;  I'll  guaran- 
tee that  the  attachment  will  not  stand." 

"  But  how  is  it  that  you  can  get  an  attachment  for  me, 
and  secure  my  debt,  while  you  can  also  guarantee  ,my 
fiiend  against  any  one  else  doing  so  ?  " 

**  Why,  you  see,  the  Supreme  Court  have  decided  on 
general  principles,  that  a  man's  residence  is  where  his 
home  and  family  are,  and  if  these  are  in  Connecticut,  of 
course  he  cannot  be  a  resident  of  New  York.  While 
on  the  other  side,  the  Superior  Court  have  decided  in  a 
similar  case  to  that  of  your  friend's,  that  when  a  man  has 
an  established  business  place  in  New  York  city,  where 
he  is  ordinarily  to  be  found  during  the  business  hours  of 
the  day,  even  though  he  may  go  out  of  the  State  every 
night  to  sleep,  he  can  not  be  regarded  as  a  non-resident 
in  the  spirit  of  the  statute  authorizing  attachments  to  issue 
against  the  property  and  estate  of  non-residents.  Both 
decisions  are  good  law  in  the  respective  Courts,  until  the 
Court  of  Appeals  overrules  one." 

So  long  as  lawyers  can  split  hairs,  so  extremely  fine,  it 
is  prudent  for  an  insolvent  to  be  prepared,  by  a  previous 
consideration,  and  provision  if  necessary,  for  any  legal 
action  which  it  is  possible  to  commence  against  him. 

Finally,  I  would  say,  let  the  insolvent  never  become 
wearied  out  with  his  efforts,  so  long  as  his  estate  is  un- 
divided, even  though  in  the  hands  of  an  assignee  or  re- 
ceiver, there  is  a  chance  that  by  perseverance  and  energy 
he  may  secure  a  compromise,  and  thus  obtain  a  release. 
He  ought  to  be  able  to  realize  Irom  fifteen  to  twenty  per 


368 


Clearing  an^ay  the    Wreck. 


cent  more  out  of  his  assets  than  another  person  could, 
and  it  is  to  this  point  he  must  direct  his  energy  and  argu- 
ments. Never  despair  of  a  compromise  settlement,  should 
be  the  motto  of  all  insolvents. 

When  a  compromise  settlement  has  been  made,  and  ex- 
tended paper  given,  as  is  usually  the  case,  the  wreck  may 
be  said  to  have  been  cleared  off,  and  the  solid  foundation 
bared  ready  to  be  built  on  again.  And  now  it  is  specially 
incumbent  on  the  dealer  to  review  his  Avhole  past  history, 
and  by  the  experience  of  that  past  steer  clear  of  the  errors 
in  the  future.  If  he  has  any  qualification  for  business 
he  ought  to  be  able  to  understand  the  causes  of  his  fail- 
ure,  and  how  to  guard  against  them.  Experience  is 
about  the  only  business  capital  that  a  released  insolvent 
can  honestly  claim  to  have  left.  When  he  applies  for 
credit  again,  he  stands  in  this  unpleasant  dilemma :  Does 
he  ask  credit  because  he  is  honest?  "Yes,  there  is  no 
doubt  of  that ;  you  have  given  up  and  paid  over  the  last 
cent  that  your  assets  would  possibly  yield,  but  you  know 
mere  honesty  will  not  pay  debts,  and  1  can  not  trust 
you !  "  Does  he  seek  credit  because  he  has  some  means 
left  ?  "  Yes,  then  you  are  a  rogue  ;  you  have  kept  back 
something,  or  misrepresented  the  value  of  your  assets, 
and  swindled  your  creditors  by  inducing  them  to  take 
less  than  you  could  really  have  paid,  and  you  are  not  to 
be  trusted ! " 

The  first  effort,  therefore,  of  the  released  dealer,  should 
be  to  get  additional  capital  in  some  legitimate  way,  and  he 
can  well  afford  to  give  a  large  proportion  of  the  profits 
to  any  one  who  will  furnish  this  necessity — for  a  year  or 
two  at  least.  Perhaps  the  best  way  to  get  this,  is  by 
finding  a  partner  witli  means.  Sometimes  personal  friends 
or  relatives  will  loan  the  dealer  limited  amounts  to  start 
him  again,  but  these  loans  are  more  a  matter  of  favor 


Obtaining  JVefy  Capital, 


369 


than  of  business.  But  whether  of  favor  or  otherwise,  the 
dealer  should  be  careful  to  so  manage  his  business  that 
those  who  are  somewhat  disposed  to  aid  him  may  be 
helped  on  in  their  kind  intentions,  and  not  hindered. 

A  man  who  shows  his  friends  that  there  is  a  good  pros- 
pect of  not  only  paying  them  back  the  money  they  may 
advance  him,  but  also  a  liberal  compensation  for  the  use 
of  it,  is  much  more  likely  to  get  it,  than  one  who  can 
give  no  such  assurances.  We  all  like  to  be  charitable  at 
times,  but  don't  Avant  the  charity  to  cost  too  much,  even 
when  bestowed  on  a  near  relative. 

Men  in  this  position  are  sometimes  disposed  to  under- 
rate  the  value  of  capital,  and  are  unwilling  to  give  such 
a  share  of  the  profits  of  the  business  to  one  who  pos- 
sesses it,  as  will  induce  the  capitalist  to  join  in  the 
enterprise.  They  seem  to  regard  the  business  as  so  well 
established,  that  the  little  capital  they  need  is  a  mere  baga- 
telle, which  they  would  be  glad  to  have  if  they  could 
get  it  at  the  ordinary  rate  of  interest.  But  as  for  giving 
half  their  profits  to  some  man  merely  for  furnishing  a 
few  thousand  dollars,  "  No,  indeed,  they  will  see  him  fur- 
ther first ! — they  are  not  going  to  lower  their  talents  and 
business  experience  to  a  par  with  another  man's  money." 

A  dealer,  whose  business  had  been  of  such  magnitude 
as  to  have  required  $10,000  capital  to  properly  carry  it 
on  who  has  just  made  a  compromise  of  indebtedness,  at 
a  rate  so  favorable  as  to  leave  him  a  surplus  of  $5,000, 
reckoning  his  assets  at  cost,  might  with  great  advantage 
to  himself  give  one-half  of  the  profits  to  any  one  who 
would  put  in  |5,000  in  cash  at  the  risk  of  the  business, 
even  though  the  person  should  be  devoid  of  business  ex- 
perience. It  is  not  necessary  that  such  a  partnership 
should  continue  a  long  time.  It  could  be  made  for  a  year, 
and  renewed  if  advisable  from  year  to  year,  until  the  ex- 


370 


Cutting  off  the  Credit  business. 


deducing  the  Stock, 


871 


perienced  partner  found  himself  ablie,  by  the  increase  of 
his  means,  to  carry  on  the  business  alone. 

When  additional  capital  can  not  be  obtained,  the  only 
course  is  for  the  dealer  to  liquidate  to  a  certain  extent, 
and  reduce  the  magnitude  of  the  business,  and  its  ex- 
penses, (and  his  own  expenses  if  necessary,)  to  the  amount 
he  can  do  on  his  reduced  capital.  As  the  crediting  out 
of  goods  is  a  frequent  cause  of  failure,  this  part  of  the 
business  should  be  cut  off  at  once,  and  the  sales  made 
for  cash  only.  Very  often  this  will  be  a  suflScient  re- 
duction. 

If  the  business  has  been  a  cash  one,  and  the  difficulties 
have  come  through  keeping  a  heavy  stock  of  goods,  this 
must  be  reduced.  It  is  sometimes  very  difficult  to  re- 
duce a  stock  of  goods  in  such  way  as  to  continue  its  aver- 
age profitableness.  The  trouble  is  that  the  unsaleable 
goods  remain  on  hand,  and  if  those  which  are  in  demand 
are  not  re-purchased,  sales  fall  off  unduly.  It  is  best  gen- 
erally to  reduce  stock  on  these  occasions,  by  dispensing 
with  classes  of  goods ;  selecting  those  out  where  the  least 
profit  is  made  in  proportion  to  the  capital  required  to 
keep  up  an  assortment.  Taking  care,  of  course,  that  the 
class  proposed  to  be  sold  out  is  not  one  indispensable  to 
the  sale  of  other  goods. 

This  plan  is  especially  preferable  in  towns  where  there 
are  other  stores  at  which  customers  can  obtain  the  ar- 
ticles which  are  to  be  dispensed  with,  as  the  buyers  are 
not  so  likely  to  buy  from  a  limited  assortment  when  they 
have  access  to  a  fuller  one.  In  country  places  more 
kinds  of  goods  may  be  kept,  with  less  variety  in  each,  as 
the  buyers  are  content  to  put  up  with  less  variety  when 
they  are  sure  of  finding  something  in  the  line  of  what- 
ever they  may  need. 

When  the  stock  is  to  be  reduced  in  this  way,  the  best 


plan  is  to  select  out  all  such  goods  as  have  not  sold 
readily,  and  those  which  sell  so  rarely  that  it  is  less  profit- 
able to  keep  them,  and  place  them  prominently  before  the 
customers,  making  extra  efforts,  by  reduction  of  price  if 
necessary  (which  it  usually  is)  from  week  to  week,  till 
they  are  disposed  of.  Sometimes  they  may  be  advanta-, 
geously  sent  to  other  localities  and  sold. 

In  reducing  stock  by  departments,  it  requires  some  dis- 
crimination, as  there  may  be  no  necessity  for  reducing  tho 
price  of  some  of  the  leading  articles  to  any  great  extent. 
Indeed,  to  profitably  close  out  by  departments  it  may 
be  well  to  purchase  from  time  to  time  a  small  quantity  of 
the  leading  articles,  to  keep  up  a  sort  of  partial  assort- 
ment to  sell  off  to  advantage  the  more  unsaleable  ar- 
ticles. 

Some  dealers  are  very  reluctant  to  take  a  sufficiently 
reduced  view  of  the  value  of  their  old  stock  when  they 
are  really  desirous  of  selling  it  off.  As  they  go  oyer 
their  stock  piece  by  piece,  one  article  after  another  which 
should  be  sold  off  is  reserved  and  laid  back  on  the  shelves, 
because  it  is  cheap  enough  already,  or  is  intrinsically 
worth  more  than  is  asked  for  it.  Or  perhaps  because  it 
is  not  just  the  season  for  selling  it.  Of  course  there  are 
periods  of  the  year  when  certain  goods  sell  better  than  at 
other  times,  and  some  things  may  be  reserved  for  the  ap- 
propriate season,  but  to  a  man  who  wants  to  reduce  his 
stock,  there  is  no  time  like  the  ever  present  now.  It  is  a 
good  method  in  passing  judgment  on  the  value  of  such 
old  stock,  for  the  dealer  to  consider  what  he  would  be 
willing  to  buy  more  of  it  at,  and  be  governed  by  this 
view,  as  to  its  real  worth. 

If  sufficient  attention  has  been  paid  to  getting  rid  of 
the  least  desirable  stock,  as  suggested,  whatever  of  sur- 
plus is  left  as  capital  to  the  dealer,  after  payment  of  the 


372 


dangers  of  the  position. 


Obtaining  JVew  Credit, 


37B 


Hi 


m 


LI; 

I 


compromise,  will  be  in  desirable  goods,  and  will  be  ac- 
tive capital. 

Among  those  who  have  failed  and  compromised  their 
debts  it  Ts  noticeable  that  very  few  succeed  afterward, 
who  do  not  fully  realize  the  change  that  there  is  in  their 
position  among  dealers.  Those  that  keep  straight  on  with 
the  same  amount  of  stock,  and  same  expenses,  under  the 
seeming  impression  that  as  they  have  compromised  their 
debts,  and  owe  now  perhaps  not  more  than  one  half  of 
what  they  did  before,  they  will  have  no  difficulty  of  suc- 
ceeding in  the  future,  are  almost  sure  to  fail  again. 

There  are  several  things  which  more  than  counterbal- 
ance the  nominal  advantage  of  a  reduction  in  the  amount 
of  indebtedness.  The  prestige  which  surrounded  the 
dealer  when  he  was  thought  a  successful  trader  is  gone  ; 
and  with  it  in  a  great  measure  his  credit.  Where  he 
before  purchased  on  credit,  and  often  sold  the  goods  be- 
fore he  was  called  on  to  pay  for  them,  he  must  now  pay 
cash— if  not  down,  at  least  in  very  short  time.  Many 
will  even  doubt  his  ability  to  pay  the  notes  given  in  com- 
promise out  of  his  assets,  and  until  his  success  is  estab- 
lished by  a  year  or  so  of  new  experience,  but  limited  credit 

can  be  expected. 

The  extension,  which  is  generally  obtained  on  the  com- 
promise payments,  sometimes  allows  the  dealer  a  tem- 
porary use  of  the  money  which  is  taken  in  from  day 
to  day.  But  this  must  be  cautiously  used.  For  the  first 
few  months  after  such  a  settlement,  until  one  or  two  of 
the  extended  payments  mature,  the  dealer  will  find  him- 
self very  easy  in  his  circumstances ;  and  in  comparison 
with  his  former  struggles,  before  failure,  will  feel  so  re. 
lieved  as  for  the  time  to  think  that  his  difficulties  are  all 
ended.  But  this  ease  is  deceptive,  and  leads  him  often 
astray,  by  encouraging  a  disposition  to  bold  on  to  unsale- 


able stock  for  a  better  time,  or  to  the  purchase  of  more 
goods  than  the  diminished  capital  warrants.     This  seem- 
ing  abundance  of  money  at  this  period  should  be  used 
judiciously   in  laying  the  foundation  for  a  new  credit, 
with  the  old  creditors,  by  discounting  the  compromise  paper 
under  an  arrangement  that  a  new  credit  for  goods  can  be 
had  to  the  same  amount.     Or  if  it  is  impossible  to  get 
this,  which  it  often  is,  then  by  using  the  money  to  pur- 
chase for  cash  in  other  houses,  and  by  these  cash  pur- 
chases  preparing  the  way  for  a  future  credit  when  needed. 
It  is    with  regret  it  must  be  said,  as  a  general  thing 
easier  to  get  credit  in  a  new  house  than  again  in  the  old 
houses,  and  yet  justice  requires  that  an  insolvent  when  he 
recommences,  should  give  his  trade  to  those  who  have 
suffered  by  his  failure,  if  they  will  sell  him  goods  as  favor- 
ably as  others,  and  when  he  is  in  doubt  of  the  compara- 
tive favorableness,  to  incline  rather  to  the  side  of  his  old 
creditors.    Nor  should  he  be  too  sensitive  if  they  occasion- 
ally  refer  to  the  loss  they  have  sustained  by  him,  in  such 
a  way  as  to  make  him  feel  that  they  remember  it.    These 
references  to  his  failure  may  incline  him  to  go  to  other 
places  to  deal,  where  he  will  not  hear  of  his  misfortunes, 
but  unless  his  old  creditors  show,  by  puttmg  up   their 
prices  or  by  other  clear  indications  that  they  do  not  want 
a  rene'wal  of  his  trade,  he  will  do  better  to  submit  to  this 
humiliation,  and  outlive  its  temporary  action.    One  of  the 
best  recommendations  a  dealer,  who  has  recently  compro- 
mised his  debts,  can  have  in  the  market  where  he  buys 
goods,  is  to  have  it  said  that  those  who  compromised  with 
him  are  willing  to  sell  him  again  on  credit.  ,  Their  con- 
fidence  in  him  has  double  the  influence  that  credit  m  en- 
tirely new  houses  wUl  possess, 

The  business  world  seems  to  have  not  yet  settled  upon 
the  precise  scale  of  expenditure  which  a  dealer  who  has 


i 


374 


Heducing  Private  Expenditure, 


What  is  made  by  the  Compromise. 


875 


recently  compromised  his  debts  may  adopt  as  the  rate  for 
his  private  and  family  expenses,  without  rendering  him- 
self liable  to  the  imputation  of  supporting  it.  by  a  dis- 
honest settlement  with  his  creditors,  and  probably  it 
never  will.  Each  individual  case  differs  from  others  in 
many  points,  and  what  might  seem  in  one  case  a  suffi- 
ciently reduced  expenditure,  may  in  another  case  seem  too 
extravagant.  Especially  so  to  the  creditors  who  have 
lost  money  by  the  failure. 

And  yet  it  is  desirable  that  this  matter  of  the  expense 
und  style  of  private  living  should  be  considered,  as  very 
often  much  of  discredit  will  attach  to  a  dealer  recently 
failed,  if  a  too  liberal  style  of  living  is  continued.  It  will 
be  said  of  him  that  he  is  living  on  the  money  he 
made  by  failing,  and  his  reputation  as  an  honest  man  will 
suffer,  and  that  quickly  reacts  on  his  business  credit  and 
standing.  If  any  general  rule  could  govern  all  cases,  it 
might  be  one  that  would  reduce  the  yearly  expenditure 
precisely  in  proportion  to  the  rate  of  reduction  from  the 
full  amount  of  the  debts  by  the  compromise.  That  is,  if  a 
dealer  has  been  living  at  a  yearly  expense  of  $2,000  a 
year,  and  failing,  should  pay  fifty  per  cent  to  his  creditors, 
he  would  not  subsequently  be  liable  to  reproach  if  he 
limited  his  expenditure  for  private  living  to  $1,000  a  year ; 
provided,  too,  there  was  reasonably  apparent  an  income 
from  the  resuscitated  business  to  maintain  the  expenditure. 

The  question  of  what  profit  or  advantage  an  insolvent 
may  be  allowed  to  make  by  the  compromise  of  his  debts, 
other  than  his  release  from  liability,  as  a  compensation  to 
him  for  the  time  and  ability  given  in  settling  up  the 
estate,  or  which  the  leniency  of  his  creditors  should  leave 
to  him,  as  a  sort  of  exempted  means  to  keep  himself  and 
family  from  want,  is  a  delicate  one,  and  is,  it  must  be 
confessed,  approached  with  diffidence.     The  principles 


are  all  unsettled.  We  recognize  that  the  old  rule  of 
"paying  whatever  is  nominated  in  the  bond,"  even  to 
« the  pound  of  flesh,''  has  passed  away.  And  it  is  al- 
ways more  easy  to  find  fault  with  and  dispossess  old 
established  usages  than  it  is  to  propose  and  adopt  new  and 
better  ones.  Such  innovations  often  have  very  extensive 
ramifications,  seriously  affecting  other  accepted  and  hon- 
ored laws  and  observances,  and  nothing  short  of  a  prac- 
tical trial  can  prove  either  their  beneficial  or  mischievous 

influences. 

We  will  consider  first,  the  least  liberal  view,  as  exem- 
plified in  the  case  of  a  dealer  who  fails  and  gives  up  every- 
thing to  his  creditors.  In  conformity  with  the  prmciples 
of  all  insolvent  or  bankrupt  laws,  he  should  then  be  per- 
mitted to  go  clear,  and  turn  his  attention  to  such  modes 
of  obtaining  a  living  for  his  family  as  he  may  thmk  ad- 
visable.  His  creditors  sold  him  the  goods,  relymg  on 
his  means  and  his  honest  and  faithful  management  of 
them,  without  any  lien  or  mortgage  on  his  future,  if  at 
any  time  he  gave  up  all  his  means.  These  assets  that  he 
gives  up  may  have  cost  him  as  much  as  he  owes,  but  they 
are  seldom  worth  that  to  the  creditors,  who  to  realize  a 
dividend  from  them,  must  place  them  in  the  hands  of  an 
assi<^nee  or  other  receiver  to  make  sale  of  them  and  di- 
vide^'the  proceeds.  Such  sales  must  necessarily  be  forced, 
and  out  of  the  proceeds  must  be  paid  the  ei^penses  of  the 
assignee  and  of  the  hquidation,  resulting  generally  in  a 
large  reduction  from  the  dividend  which  the  assets  would 
have  made  at  their  nominal  value.  Now,  if  the  debtor  is 
willing  to  pay  this  reduced  amount,  devoting  the  tune  he 
would  bestow  on  other  pursuits  in  settling  up  the  estate, 
lh«re  would  seem  to  be  no  especial  favor  shown  in  per- 
mitting him  to  do  so.  The  profit  he  would  make  by  it 
would  depend  very  much  On  his  energy  and  abihty,  and 


376        Propriety  of  a  More  liberal  Provision, 

whatever  it  might  be,  it  would  seem  hardly  just  to  say  that 
it  was  made  out  of  his  failure,  at  least  in  any  bad  sense. 

But  we  will  take  a  more  liberal  view,  and  consider 
how  much  could  be  reserved  to  the  insolvent,  not  as 
earned  by  any  service  to  the  estate,  but  in  the  spirit  of 
property  exempt  from  execution.  As  previously  remarked,, 
the  homestead  laws  seem  to  recognize  some  such  liberal 
exemption  as  beneficial,  not  only  to  the  debtor,  but  also 
to  the  community  generally. 

As  a  creditor,  the  author  was  always  willing,  when  sat- 
isfied of  the  honesty  and  good  intent  of  the  insolvent,  and 
when  none  of  the  objections,  heretofore  named,  could  be 
justly  urged,  to  accept  such  a  compromise  as  would  leave 
the  debtor's  capital  to  bear  just  such  a  share  of  loss  as  his 
creditors  sustained.  That  is,  if  the  dealer  starting  in 
business  with  $5,000  capital  should,  after  a  year  or  two,  be- 
come insolvent,  and  able  to  pay  only  fifty  per  cent  of  his 
debts,  he  might  be  permitted  to  retain  fifty  per  cent  of 
his  capital,  or  $2,500,  for  the  future  prosecution  of  his 
business.  When  his  capital  had  been  reduced,  to  his  own 
knowledcce,  prior  to  the  creation  of  the  indebtedness 
which  he  owed  when  failing,  then  such  reduced  capital 
was  to  be  considered  the  amount  of  which  he  might 
retain  the  proportion.  As,  for  example,  if  the  same 
dealer  before  cited  should  find,  after  one  or  two  years 
business,  that  he  had  sunk  a  part  of  his  capital,  and  was 
only  worth  $3,000,  and  still  continued  on  in  business,  again 
buying  goods,  he  should  be  allowed  to  retain  the  propor- 
tion of  $3,000  only.  For  the  knowledge  that  he  was 
losing  money  in  his  business,  should  have  put  him  on  his 
guard,  and  if  he  continued  on  in  business  he  could  not 
well  avoid  the  imputation  that  he  had  purchased  goods 
on  credit,  foreseeing  his  insolvency.  At  least  he  could 
not  hare  the  justification  that  the  losses  which  caused 


Advantage  of  it  to  the  Creditor, 


377 


his  failure  were  unexpected,  and  therefore  in  a  measure 

unpreventable.  . 

On  the  other  hand,  no  sudden,  unrealized  and  nommal 
increase  of  capital,  which  a  previous  two  or  three  years 
trade  had  shown  by  the  balance  sheet  to  have  been  made, 
was  to  be  taken  into  account.  The  balance  sheet  of  a 
year  or  two  previous  might  have  shown  an  increase  of  the 
capital  from  $5,000  to  $8,000,  but  if  the  dealer  became 
insolvent  within  a  year  or  two  after,  this  increase  should 
be  regarded  as  only  nominal,  and  the  original  amount  of 
capital  ought  to  be  taken  as  the  basis. 

If  some  corresponding  principle  or  rule  could  be  uni- 
versally established,  there  would  be  but  little  induce- 
ment  for  the  insolvent  debtor  to  disguise  the  position  of 
his  affairs  from  his  creditors.  It  would  be  his  interest,  as 
well  as  his  duty,  to  stop  when  he  knew  himself  to  be  m- 
solvent,  so  that  by  making  the  largest  possible  dividend 
to  his  creditors,  he  would  retain  the  largest  possible  divi- 
dend for  himself.  •         i,    • 

It  must  be  remembered,  that  as  a  general  thing,  the  in- 
solvency  of  a  man  in  the  retail  business  does  not  come 
upon  him  suddenly.  There  will  often  be  season  after 
season  when,  although  his  balance  sheet  shows  a  nominal 
capital  left  to  him,  it  is  so  only  by  shutting  his  eyes  to 
the  fact,  that  much  of  his  stock  is  not  worth  what  it  cost 
him,  and  is  taken  at,  and  many  of  his  outstanding  ac- 
counts, which  go  to  swell  up  the  sum  total  of  his  assets, 
are  uncoUectable  and  nearly  worthless.  And  he-  can  at 
best  only  hope  that  business  will  turn  out  better  in  the 
future,  so  that  he  may  get  through  without  failure.  £ven 
when  his  nominal  surplus  is  so  reduced  by  and  by,  that 
he  positively  knows  it  is  insufficient  to  pay  his  liabilities, 
he  still  holds  on,  hoping  against  hope.  He  will  retrench, 
he  wUl  sell  off  his  old  stock,  he  wiU  make  extraordmary 


378       ^  ^evailing  Cause  for  ^ad  -Failures. 

efforts  to  collect  in  his  old  accounts,  he  will  include  the 
sale  of  some  other  articles  in  his  business-anything,  m 
fact,  rather  than  fail.     That  can  not  be  thought  of.    \\  ith 
a  family  to  support,  the  contemplation  of  it,  and  its  prob- 
able result  in  thrusting  him  out  of  busmess,  with  no  re- 
source from  which  to  get  a  living  for  them,  almost  un- 
nerves  his  energies.     To  struggle  on  is  the  certainty  of  a 
livincr  for  his  familv,  for  a  time  at  least,  while  to  stop  now 
and  "acknowledge  his  Insolvency  is  poverty.     Forward 
then  he  stumbles,  foint  and  disheartened  wjth  the  pros- 
pect,  but  trusting  in  the  vague  hope  that  there  will  be  a 
war  or  some  other  concurrence  of  circumstances,  which 
will  make  such  a  demand  for  goods  that  his  old  stock  can 
be  sold  off  profitably,  or  some  extraordinary  good  for- 
tune  to  his  debtors,  which  will  enable  them  to  pay  up, 
rather  than  in  his  personal  ability  to  recover  himself  from 
his  failing  position ;  borrowing  to-day  from  one  fnend,, 
to-morrow  from  another  to  repay  that,  occasionally  making 
some  sacrifice  of  his  assets  to  raise  money  to  push  through 
a  period  of  heavy  payments,  till  finally,  after  exhausting 
the  patience  of  his  friends,  and  the  forbearance  of  hu; 
creditors,  he  comes  to  a  stand  still,  with  barely  sufficient 
assets  left  to  pay  his  borrowed  money,  leaving  nothing 
for  his  general  creditors,  and  all  chance  for  a  release  from 
them  gone,  except  through  the  kindly  agency  of  somo 

bankrupt  law. 

How  much  better  for  all  concerned,  creditors  as  well  aa 
debtors,  if  some  provision  were  admitted  for  the  insol- 
vent, founded  upon  the  dividend  he  should  pay,  whicli 
would  induce  him  when  insolvent,  to  suspend  when  he 
could  still  pay  a  considerable  dividend  to  his  creditors. 


CHAPTER   XXIV. 

BUSINESS   QUALIFICATIONS. 

HAVING  specially  considered  each  important  subject 
likely  to  be  of  use  in  the  retail  business,  it  will  not  be  out 
of  place  in  conclusion  to  say  somethmg  in  reference  to 
the  qualifications  of  the  man  himself. 

There  are  certain  characteristics  which  are  required  and 
which  we  expect  to  find  in  all  men  simply  as  men,  what- 
ever their  pursuits  in  life  may  be,  such  as  honesty,  truth- 
fulness, justice,   civility,  patriotism,   philanthropy,    and 
other  moral  and  social  virtues.    Assuming  that  the  busi- 
ness man  has  all  these  in  common  with  other  men,  and 
that  he  has  ordinary  common  sense,  we  pass  on  to  con- 
sider a  few  other  qualities  vitally  essential  to  his  success 
in  business.     Some  of  these  are  in  a  measure  constitu- 
tional, and  cannot  readily  be  gained  when  one  is  deficient 
in  them ;  but  something  may  be  done,  when  a  man  knows 
his  weak  points,  to  supply  the  deficiency.     Reflection  on 
the  subject  may  lead  a  man  to  see  that  he  has  not  suffi- 
cient   economy— is  inclined  to  be  extravagant  for  his 
means,  or  that  he  is  rash  in  buying  his  goods.    If  such  a 
one  would  put   up  conspicuously,   where  he  would  see 
them  hourly,  one  or  two  of  Franklin's  prudential  max- 
'  ims  for  saving,  and  a  current  maxim  or  two  in  the  trade, 
as  "  it  is  better  to  cry  after  the  goods  than  over  them," 
and  get  these  ideas  so  instilled  into  his  mind,  that  when- 
ever he  would  spsnd  or  buy,  the  maxim  would  be  a  moni- 
tor, he  might  soon  feel  their  influence  in  controlling  his 
actions. 


^ 


380 


<( 


£^ioh^  Thyself, 


» 


£^nergy  in  AcHon, 


381 


Unfortunately  we  are  but  poor  judges  of  our  qualifi- 
catioDS  in  these  respects.  As  a  general  thing  we  think 
the  course  we  are  pursuing  about  right,  or  we  would  not 
pursue  it,  and  it  is  often  only  when  we  get  an  insight  into 
ourselves,  through  the  advice  of  some  clear-headed  friend, 
that  we  "  see  ourselves  as  others  see  us,"  and  learn  to 
know  our  deficiencies.  The  most  ignorant  man  is  some- 
times the  most  wise  in  his  own  conceit ;  and  the  most 
vacillating  often  regards  himself  as  firm  and  persistent  as 
a  rock,  and  possibly  may  be  so  at  times  when  specially 
aroused. 

The  consideration  of  these  traits  of  character  is  per- 
haps more  important  to  those  who  are  training  up  their 
sons  to  business  pursuits,  who  may  see  in  them  certain 
tendencies  which  they  can  cultivate  or  repress,  as  may  be 
necessary. 

An  effort  is  made  to  place  the  subjects  in  the  order  of 
their  essentiality  or  indispensableness  to  even  limited  suc- 
cess in  business.  For  great  success  they  are  all  impor- 
tant, and  it  may  be  difficult  to  say  which  is  the  most  so, 
yet  for  the  reasonable  prosperity  which  is  ordinarily  ex- 
pected in  the  retail  trade,  the  limited  quantity  which  most 
men  possess  in  those  last  named  will  suffice. 

General  knowledge  of  the  goods  in  which  the  person 
deals,  must  be  regarded  as  the  primary  business  requisite. 
This  was  considered  at  such  length  in  Chapter  II,  tliat  it 
need  not  be  further  discussed.  Its  importance  ought  to  be 
apparent  to  all. 

Energy  in  action  is  the  second  requisite  to  even  mod- 
erate success.  This  is  natural  to  the  healthy  human  body 
in  most  cases.  But  there  are  some  who  seem  from  child- 
hood to  be  given  over  to  indolence  and  sloth,  and  are 
sluggish  both  in  mind  and  body.-  Too  often,  however, 
the  cause  for  such  enervation  and  apathy  is  to  be  found 


in  the  indulgence  of  the  use  of  tobacco,  ardent  spirits,  or 
other  stimulant,  or  in  licentious  practices,  which  must  be 
abandoned  before  any  change  can  be  hoped  for.  The 
brain  and  the  muscles  relieved  from  these  waistinir  ex- 
cesses,  and  strengthened  by  fresh  air  and  exercise  may 
possibly  so  far  recuperate  as  that  action  will  be  necessary 
and  enjoyable  simply  for  its  own  sake. 

There  are  hundreds  of  once  promising  sons  throughout 
our  land,  victims  to  some  of  these  enervating  indulgences, 
who  have  grown  to  manhood  without  energy  enough  to 
perfect  themselves  in  any  occupation  ;  great  in  speech  but 
weak  in  action.  Without  ability  to  fill  subordinate  parts 
in  any  undertaking,  they  yet  aspire  to  think  themselves  ca- 
pable of  managing  the  weightier  parts.  Ever  longing 
for  some  opening  "  worthy  of  their  talents  ;" — "  if  they 
could  only  have  the  opportunities  which  a  Girard,  an 
Astor,  a  McDonough,  a  Lawrence,  or  a  Longworth  had, 
then,  indeed,  you  would  see  something  worthy  of  them !" 
A  man  of  energy  controls  many  circumstances  other- 
wise unpropitious,  and  opens  up  opportunities  for  him- 
self, by  which  he  advances  to  honor  and  wealth. 

Sometimes  a  want  of  energy  is  shown  by  the  sons  of 
wealthy  men,  because  they  have  no  sufficient  stimulus. 
They  have  other  good  requisites,  but  no  special  necessity 
for  application  arising  from  want  of  money.  They  have 
never  known  want,  and  think  they  never  will.  A  cer- 
tain degree  of  pride  may  induce  them  to  try  to  succeed  in 
what  they  undertake.  If  they  are  likely  to  inherit  wealth 
enough,  and  it  is  thought  desirable  to  give  them  a  busi- 
ness education  and  experience,  that  they  may  better  know 
how  to  take  care  of  their  inheritance,  they  should  be 
trained  to  higher  aspirations  than  merely  making  money. 
They  can  be  educated  to  take  an  interest  in  the  religious, 
moral  and  philanthropic  enterprises  of  the  day,  any  of 


382 


SPerseverancC' 


Causes  of  VaciUation. 


383 


f 


» 


\    ■ 


which  they  can  advance  by  the  money  which  they  may 
make  in  business,  to  an  extent  beyond  what  their  present 
or  expected  resources  could  afford  to  bestow.  And  in 
this  way  obtain  the  stimulus  to  energetic  action,  which 
the  mere  desire  to  make  money  for  its  own  sake  would 
not  give. 

Perseverance  is  necessary  to  success  in  almost  any  un- 
dertaking in  life.  A  business  is  not  built  up  in  a  year — 
often  not  in  three  or  four  years.  And  it  is  more  es- 
pecially required  in  the  management  of  the  business  as  a 
whole,  than  in  special  actions  or  items  of  it.  The  bad 
effects  of  a  want  of  this  trait  of  character  are  often  visi- 
ble in  the  affairs  of  those  around  us.  A  man  starts  in  a 
business  which,  like  a  house,  he  has  to  build  up  anew 
from  the  foundation  ;  or  he  takes  one  that  somebody  has 
already  started,  which  may  be  compared  to  a  house  un- 
finished. He  works  at  it  faithfully  for  a  year,  or  two,  or 
longer,  but  he  becomes  so  wearied  by  the  slow  progress 
he  makes,  that  soon,  shutting  his  eyes  to  all  the  pros- 
pects of  success,  he  sells  out  his  chance,  when  possibly 
he  is  just  on  the  eve  of  a  successful  completion  of  his  im- 
dertaking,  and  his  house,  which  is  almost  ready  to  shelter 
him  for  life,  is  turned  over  to  another ;  and  he,  allured  by 
other  schemes,  starts  anew  at  something  else,  which  seems 
to  give  promise  of  speedier  results. 

There  are  different  reasons  for  this  want  of  persever- 
ance. Oftenest,  perhaps,  it  comes  from  levity  of  mind, 
for  it  is  found  most  in  children.  Some  grown  people 
seem  in  this  respect  to  be  children  all  their  lives.  Exist- 
ence is  a  playtime  or  holidav  for  them,  and  so  long  as 
they  can  get  enough  to  eat,  drink  and  wear,  care  for  the 
future  does  not  rest  heavily.  This  want  of  perseverance 
is  sometimes  said  to  adhere  very  generally  to  the  female 
sex,  when  they  are  employed  in  business  pursuits.    If  it 


does,  may  we  not  find  another  cause  for  it,  not  only  in 
that  sex,  but  in  the  other  also,  in  the  feeling  that  the  busi- 
ness is  not  of  essential  importance  in  itself,  and  is  only  a 
make-shift  or  stepping-stone,  as  in  their  case  it  must  be  re- 
garded, to  the  higher  aims  of  existence. 

Generally  to  the  American  man,  thoroughness  or  the 
successful  issue  of  what  he  undertakes,  is  his  special 
pride.  The  majority  of  young  men  of  good  health  and 
fair  average  ability  arrive  at  manhood  with  the  idea  that 
they  can  do  anything  a  little  better  than  the  most  of  peo- 
ple around  them.  This  overweening  confidence  is  not  al- 
ways supported  by  corresponding  ability,  and  the  conse- 
quence often  is,  if  success  does  not  follow  their  efforts  so 
quickly  as  they  expected,  that  the  occupation  is  at  fault. 
"  It  does  not  repay  for  the  care  and  labor  bestowed  on 
it," — and  to  keep  up  the  conceit  of  superior  abilities  the 
occupation  is  changed  to  something  more  promising. 

A  man  should  take  care  in  starting  out  in  life,  that  he 
does  not  overrate  himself,  lest  when  he  gets  into  practi- 
cal business  he  is  too  easily  dissatisfied,  and  discouraged 
by  every  postponement  of  success,  and  he,  through  this, 
become  vacillating  and  changeable  in  his  business  aims. 

If  the  possibility  of  a  disastrous  termination  to  the 
business  be  dwelt  on  continually  or  too  frequently,  when 
the  danger  is  not  really  imminent,  it  will  tend  to  produce 
irresolution  and  wavering. 

The  business  man  should  take  the  negro  preacher's 
description  of  perseverance  in  his  bull-dog,  as  his  rule : 
"  he  take  fast  hold — hang  on,  and  no  let  go." 

Conclusive  decision  is  one  of  the  best  requisites  which 
a  business  man  can  possess.  By  this  is  meant  that  capa- 
city of  mind  which  weighs  carefully  all  the  circumstances, 
or  as  many  as  may  be  necessary,  and  decides  quickly  and 
once  lor  all  time,  what  shall  be  the  course. 


I 
1 


384 


Conclusive  decision. 


^Promptness  in  miction* 


385 


Many  men  are  so  constituted  that  they  never  can  como 
to  a  settled  conclusion  in  any  given  case.  They  take  a 
survey,  reflect  and  decide  ;  then  look  again,  think  over 
the  matter — are  not  so  sure  that  they  were  right— and 
then  reach  a  different  conclusion,  which  because  it  is  differ- 
ent, is  not  a  conclusion  yet,  but  must  be  reviewed  ;  and 
the  final  end  is  a  state  of  uncertainty  and  doubt,  under 
which  it  is  impossible  to  transact  business  with  efficiency. 

It  is  better  to  cultivate  a  decisive  habit  in  trade,  even 
with  the  danger  of  forming  hasty  conclusions.  These 
may  occasion  loss  sometimes,  but  these  losses  lead  to 
more  careful  investigation  afterward,  while  if  the  other- 
habit  prevails,  the  days  go  by  in  vacillation  and  doubt, 
and  nothing  is  undertaken.  It  is  better  to  lose  some- 
times than  never  to  make. 

Some  men  seem  to  do  business  without  any  opinions 
of  their  own.  They  are  the  subjects  of  circumstances, 
and  the  prey  of  other  and  more  decisive  men. 

They  go  to  the  market  to  buy  goods,  with  an  opinion 
that  business  will  be  dull  m  their  region  the  coming  sea- 
son, because  the  wheat  crop  is  short,  and  have  about  con- 
cluded to  buy  only  one-half  or  two-thirds  the  ordinary 
quantity  of  goods  on  this  acccount.  On  the  cars  they 
buy  a  paper  to  read,  and  looking  over  the  market  reports, 
notice  a  suggestion  that  wheat  is  likely  to  rise,  owing  to 
the  short  crop  in  some  sections.  This  leads  them  to 
think  that  possibly  their  customers,  on  account  of  the 
higher  price  they  will  get  for  their  wheat,  will  be  enabled 
to  buy  as  many  goods  as  before.  When  they  reach  the 
market  they  are  all  unsettled  in  opinion,  and  ready  to  do 
just  what  they  see  others  doing.  If  the  wholesale  dealer 
talks  confidently  of  the  many  goods  that  he  has  sold,  or 
will  sell,  or  if  they  see  others  buying  freely,  they  go  ip 
too ;  very  often  to  regret  it  when  they  get  back  home. 


The  old  maxim  that  "  first  thoughts  are  best,"  is  true 
in  business.  The  first  conclusion  is  generally  a  result  of 
the  unbiassed  judgment.  The  later  ones  are  too  often 
modifications  of  the  first,  influenced  not  by  the  man's  own 
perception  or  judgment,  but  by  the  casual  remarks  or 
opinions  of  others,  made  or  formed  in  ignorance  of  many 
of  the  facts  in  the  case. 

Reliance  on  one's  own  judgment,  or  self-dependence  in 
business  matters,  is  always  a  desirable  part  of  a  man's 
mercantile  education.  Wanting  this,  he  is  blown  about  by 
every  breeze,  can  never  make  up  his  mind  when  or  what 
to  buy  or  sell,  and  though  he  may  make  a  living,  if  cir- 
cumstances are  propitious,  he  can  never  obtain  a  high 
standing  as  a  business  man. 

Promptness  in  action  is  another  desirable  qualification. 
It  is  the  next  step  to  decision  of  mind,  and  the  two 
are  generally  found  together,  but  not  universally  so,  as 
there  are  some  people  whose  minds  are  quickly  made  up, 
but  who  from  constitutional  indolence  are  slow  to  act. 
Indeed,  the  world  is  full  of  such  men,  many  of  them  theo- 
retically good  merchants,  energetic  enough  when  once 
under  way,  but  lacking  the  quality  which  makes  them 
jump  to  the  work. 

As  a  man  once  said  to  the  writer,  when  criticising  such 
characters :  "  they  have  no  snap  in  them."  The  sharp 
man  of  business,  like  a  well-finished  pocket  knife,  springs 
to  or  open  with  a  snap.  He  does  not  need  to  be  pushed 
all  the  way  reluctantly  by  circumstances.  He  resolves 
to-night  as  he  closes  his  store,  and  is  off  by  the  first  train 
in  the  morning,  and  while  others  are  dawdling  over  their 
coffee,  he  is  getting  the  first  selection  of  the  new  goods. 
If  he  hears  that  one  of  his  debtors  is  in  difficulty,  and 
talking  of  leaving  the  neighborhood,  he  is  on  hand  the 

same  evening,  and  gets  a  horse,  or  cow,  or  wagon,  to  se- 

83 


386     Economy — JECnon^ledge  of  Human  JVature, 

cure  his  debt,  while  those  who  take  their  time,  and  go 
late  next  morning,  find  their  debtor  missing  and  nothing 
left  for  them. 

Economy^  or  a  careful  avoidance  of  unnecessary  waste 
both  in  the  goods  that  are  dealt  in,  and  in  the  expenses 
of  conducting  a  business,  is  of  great  value  to  a  retailer. 
His  profits  are  by  the  penny-worth.  Little  by  little  his 
accumulations  must  increase,  and  want  of  attention  to 
savino-  these  littUs  in  time  and  labor,  and  in  the  petty  de- 
tails  of  the  business,  will  permit  the  profits  to  slip  through 
his  fingers  as  fast  as  they  are  made. 

The  thoughtless  extravagance  which  wastes  time  and 
money  in  trifling  ways,  is  the  crying  vice  of  the  young 
of  this  age.  A  young  man  on  a  salary  of  $1,000,  or  often 
less,  a  year,  thinks  a  dime  nothing,  and  will  spend  that 
much  ten  or  a  dozen  times  a  day,  for  some  puerile  or  use- 
less and  foolish  gratification,  and  waste  in  the  same  spirit, 
twice  as  much  more  for  his  employer.  Too  often  this 
economy  is  regarded,  especially  by  the  young,  as  parsi- 
mony or  stinginess — the  opposite  of  liberality  and  gener- 
osity, and  cried  down  as  mean ;  but  that  which  is  here 
indicated  is  the  opposite  of  prodigality  and  waste,  and  is 
in  every  way  consistent  with  liberality  and  generosity. 

Knowledge  of  human  nature^  or  the  ability  to  pene- 
trate, as  it  were,  into  the  recesses  of  others  minds,  and 
decide  as  to  how  they  will  act,  is  a  valuable  acquisition 
to  any  one  who  buys  or  sells  goods.  Some  degree  of 
skill  in  this  art  can  be  obtained  like  almost  everything 
else,  by  effort.  K  in  any  action  of  our  own  we  critically 
examine  the  motive  which  induced  the  action,  we  may 
soon  learn  what  influences  move  us,  and  therefore  what 
are  likely  to  move  others.  And  in  this  way,  when  we 
know  the  circumstances  in  which  a  person  is  placed,  we 
know  to  some  extent  how  he  will  probably  act.     Then, 


A.  Good  Memo7y  for  the  Details, 


387 


too,  the  disposition  of  mind  will  be  often  felt,  some  time 
before  the  person  acts,  and  will  show  itself  in  the  counte- 
nance ;  and  by  observation  of  the  face  we  often  have  an 
indication  of  what  the  action  will  be.  The  study,  there- 
fore, of  these  two  things  may  be  said  to  be  the  study  of 
human  nature.  The  practiced  gambler  tells  by  the  exult- 
ation pictured  on  his  adversary's  countenance,  and  per- 
haps by  some  tremor  of  the  voice  or  nerves,  that  he  has 
drawn  a  good  hand,  and  hence  risks  but  little  against  it, 
and  by  other  signs  in  like  manner  often  tells  when  his  hand 
is  a  poor  one. 

These  are  undefinable  expressions ;  they  may  be  seen 
but  not  told.  Though  we  may  describe  the  more  promi- 
nent indications  which  such  passions  as  anger,  terror, 
and  so  forth,  present  in  the  human  countenance,  the  more 
quiet  expressions  are  beyond  the  power  of  the  pen  to 
portray.  There  are  even  no  rules  for  their  delineation  on 
canvas,  and  the  painter  is  said  to  catch  the  trait,  what- 
ever it  may  be.  The  word  is  appropriate,  and  expressive 
of  the  method. 

Reference  was  occasionally  made  to  the  value  of  this 
art  in  buying  and  selling  goods,  and  if  a  more  practical 
view  of  the  subject  be  desired,  it  may  be  found  in  Chap- 
ters IV  and  IX. 

A  good  memory  for  the  details  of  the  husinesSy  and 
the  faces  and  names  of  customers,  is  very  desirable,  and 
will  add  much  to  a  retailer's  success  in  business.  The 
memory  is  a  peculiar  chronicler  of  events,  and  not  under 
very  good  control.  Some  dealers  can  tell  you  from  their 
memory  the  exact  date  of  many  trivial  events  in  local 
history,  the  names  of  the  prominent  Congressmen  at 
the  last  session,  and  the  States  they  came  from,  and  a 
thousand  other  such  matters  of  little  value  to  themselves 
or  any  body  else,  but  they  can  not  remember  what  they 


M 


;  I 


388    ftemembering  JRaces  and  JVames  of  Customers. 

were  asked  for  pepper  an  1  candles  in  'the  different  stores 
they  were  in  an  hour  before.     The   writer   once  saw  a 
dealer  name  the  prices  paid,  and  the  place  wliere  bought, 
of  a  dozen  different  articles  taken  indiscriminately  in  a 
stock  of  goods,  with  which  he  was  unacquainted,  as  a 
test  of  the  power  of  his  memory.     The  articles  selected 
having  been  bought  at  different  auction  houses  in  New 
Yorkr  at  various  sales  from  one  to  six  weeks  previous, 
and  he  having  no  interest  or  acquaintance  with  the  goods, 
except  noticing  them  sold  as  a  rival  purchaser  at  the  sales. 
In  those  sales  there  had  been  at  least  5,000  lots  of  simi- 
lar   kinds    of   goods,    of   every    conceivable   variety   of 
price,  quality,   and  style  disposed  of.     This  man's  mem- 
ory of  such  things  was  unusual.     He  could   almost   al- 
ways remember  the  price  that  any  article  brought  which 
had  been  sold  in  his  presence  during  the  season,  and  if  ac- 
quainted with  the  buyer,  could  very  often  retain  his  name 
also ;  requiring  that  he  should  retain  daily   at  least  five 
hundred  new  Uems  in  his  memory.     It  is  hardly  neces- 
sary to  say  that  he  was  very  successful  as  a  trader. 

The  prompt  recognition  of  persons  who  have  before 
traded  wii:h  the  dealer,  and  the  recollection  of  their 
names  is  very  important. 

When  we  go  into  a  store  to  buy,  thinking  that  we  are 
almost  a  stranger  there,  and  are  addressed  by  name,  and 
reference  made  perhaps  to  our  former  visit  there,  or  to 
some  circumstance  connected  with  our  home  or  near 
friends,  the  recognition  seems  very  affable  and  pleasant. 
We  feel  that  we  are  regarded  as  something  more  than  a 
mere  chance  customer,  and  are  ready  to  be  pleased  with 
what  is  shown  us.  While  just  the  reverse  feeling  is  pro- 
duced when  on  entering  a  place  where  we  think  we  ought 
to  be  known,  we  meet  on\v  the  scrutinizing  gaze  of  the 
dealer,  which  says  quite  pMmly,  "  I  think  I  have  seen  you 


jiffabitity. 


889 


before,  but  can't  tell  where  ; "  or  perhaps  worse  still,  are 
addressed  as  Mr.  Smith,  and  asked,  "  what  is  the  news 
at  Jugtown  ?"  when  our  cognomen  is  Jones,  and  we 
come  from  IJardscrabble — miles  away  from  the  other 
place.  Such  blunders  would  less  often  occur  if  attention 
was  paid  to  the  cultivation  of  the  memory  on  these  sub- 
jects. It  is  related  of  the  lamented  Lincoln,  that  he  could 
remember  the  countenance  and  recall  the  name  for  years, 
of  any  one  to  whom  he  had  been  introduced,  and  with 
whom  he  had  exchanged  a  few  words. 

Every  young  person  expecting  in  the  future  to  do  busi- 
ness, should  endeavor  to  improve  this  faculty,  by  hard, 
continuous  drilling,  in  trying  to  remember  specific  dates, 
facts  and  names,  precisely  as  a  schoolboy  remembers  his 
lessons.  A  defective  memory  can  be  much  improved  by 
such  efforts.  In  actual  business  the  powers  of  the  mem- 
ory should  be  exerted  to  remember  the  prices  of  the  goods, 
the  ainoimts  of  special  outstanding  accounts,  and  their 
maturity,  and  the  names  and  faces  of  those  who  come  to 
buy.  This  can  not  be  well  done  if  the  memory  is  filled 
with  other  things  foreign  to  the  business. 

An  ability  to  remember  everything  else  except  matters 
pertaining  to  the  business,  should  be  regarded  as  a  serious 
drawback,  and  worthy  of  more  attention  than  a  mere 
passing  regret.  It  may  be  an  indication  that  the  busi- 
ness is  not  so  agreeable  as  some  other  one  would  be. 

Affability  is  of  great  advantage  to  a  retailer  in  win- 
ning and  retaining  customers,  and  deserves  to  have  been 
mentioned  earlier  in  the  list. 

A  grum,  surly  look  and  tone  of  voice,  often  drives 
away  a  customer,  when  the  retailer  really  means  nothing 
harsh.  Ilis  feelings  have  been  perhaps  discomposed  by 
some  irritating  circumstance,  and  having  them  not  suffi- 
ciently under  control,  he  continues  for  a  time  afterwards 


1  \ 


390 


Jf^oresight, 


to  sliow  the  effects  to  others  who  are  not  connected  with 
the  original  cause.  Some  men  are  so  unhinged  by  any 
t'ir.iiv^  circumstance  of  unpleasant  character  as  to  be 
moody  and  irritable  for  a  day  afterward.  For  the  sake  of 
his  business,  a  retailer  should  control  such  manifestations. 

Foresight,  or  the  power  to  calculate  or  prognosticate 
from  the  present  circumstances,  what  the  course  of  trade 
is  likely  to  be  the  coming  season,  or  next  year,  is  of  su- 
preme importance  to  the  retailer.  The  greatest  success 
in  business  is  found  where  this  qualification  is  greatest. 

A  frequent  consideration  of  the  past  causes  which  have 
led  to  or  induced  such  prosperity  or  adversity  in  business, 
as  may  be  present,  and  estimating  from  this  kind  of  a 
foundation,  what  influence  present  circumstances  will  have 
on  the  trade  in  the  future,  and  noting  down  these  predic- 
tions, and  the  reasons  for  them ;  and  later  comparing  these 
with  the  actual  results,  will  in  time  lead  to  some  skill  in 
the  use  of  this  power. 

As  a  homely  illustration  to  the  youthful  reader  of  the 
idea,  an  incident  in  the  experience  of  the  writer  is  given : 
Some  years  ago  he  was  frequently  consulted  by  a  market 
gardener  to  whom  he  had  leased  a  piece  of  land,  as  to 
what  could  be  profitably  planted.  One  year  cabbages  had 
been  very  high,  and  the  gardener  was  making  arrange-, 
ments  the  following  summer  to  plant  a  very  large  quan- 
tity. It  was  suggested  to  him  to  inquire  among  his  fel- 
low gardeners,  whom  he  met  in  the  market,  and  get  their 
opinion,  as  on  account  of  the  high  price  last  year  they 
might  be  very  low  this  year.  He  made  the  inquiries  and 
came  home  very  sanguine.  "  Everybody,"  he  said  "  thought 
cabbages  would  be  very  dear,"  and  he  would  plant  a  large 
lot.  He  could  not  understand  the  force  of  the  reasoning 
that  if  "  everybody "  thought  they  would  bring  a  good 
price  then  "  everybody  "  was  likely  to  plant  a  large  lot  too 


£^nterj)rnse. 


391 


and  so  they  would  be  too  plentiful.  Influenced,  liowever, 
rather  more  by  the  opinion  than  by -the  reasoning  of  the 
writer,  he  confined  his  planting  to  his  ordinary  quantity ; 
fortunately  for  himself,  as  when  the  season  came  for  gath- 
ering them,  they  were  so  plentiful  that  they  did  not  pay 
for  taking  to  the  market. 

Traders  who  have  this  foresic^ht  in  a  vivid  de<^ree, 
are  often  said  to  be  "  in  luck."  They  seem  to  have  just 
the  article  that  is  wanted  when  at  its  greatest  demand, 
and  Avhen  the  demand  falls  off,  and  the  price  with  it,  they 
have  none  left  to  lose  on.  Their  luck  comes  solely  from 
their  ability  to  see  from  some  present  circumstances  what 
the  future  is  likely  to  require,  and  directing  their  actions 
by  this  probability. 

Enterprise,  last  •  named,  but  by  far  the  most  important 
qualification  for  great  success  in  business.  It  is  not  so  es- 
sential in  making  merely  a  comfortable  living  and  a  mod- 
erate accumulation,  but  of  paramount  importance  to  any 
one  who  starts  out  with  a  desire  to  count  his  profits  by  the 
hundreds  of  thousands. 

It  is  boldness  in  marking  out,  and  intrepidity  in  follow- 
ing in  new  paths  and  new  measures  in  business.  To 
very  prudent  men  the  course  seems  often  rash,  and  always 
venturesome. 

But  true  enterprise  takes  note  of  everything  that  en- 
dangers success,  and  as  far  as  human  agency  can,  guards 
against  them.  Having  wisely  and  prudently  (for  there 
must  be  prudence  in  the  calculations,  though  there  may 
seem  to  be  none  in  the  actions)  concluded  that  the  chances 
are  favorable,  it  pushes  ahead  determined  to  win,  or— no, 
there  is  no  other  conclusion— it  is  to  win  !  If  possibility 
of  failure  were  admitted,  that  would  unnerve  the  hand 
that  steers.  The  progress  is  like  shooting  a  dangerous 
rapid  in  a  boat.     Certainty  that  with  watchfulness,  good 


892 


CONCLUSION. 


judgment  and  skill  it  can  be  safely  accomplished,  is  of 
paramount  importance.  The  most  of  us  grow  dizzy  m 
such  exciting  and  perilous  undertakings,  and  lose  our 
equilibrium.  In  our  fright  we  give  too  strong  a  pull  to 
the  ricrht,  to  clear  one  rock,  and  this  brings  us  upon  an« 
other  before  we  are  aware. 

Whether  a  certain  venture  is  a  rash  one  or  not,  de« 
pends  very  much  on  the  man  who  manages  it.  If  he  has 
carefully  calculated  all  the  risks,  and  guarded  against 
them,  it  may  be  simply  a  bold  undertaking,  which  in  its 
results  will  do  him  credit.  But  if  recklessly  undertaken, 
without  prudent  safeguards  against  the  dangers  which 
environ  it,  its  disastrous  termination  will  bring  shame  and 
disgrace  on  its  projector. 


APPENDIX. 


MERCANTILE   PROBLEMS. 

A  FEW  problems  are  inserted  here  on  some  of  the  ordi- 
nary business  questions,  not  merely  to  be  worked  out  by 
mathematical  rule— no  rules  for  their  solution  being  given 

^but  as  a  study  to  lead  the  uninitiated  to  more  fully 

consider  the  various  elements  and  processes  necessary 
to  obtain  the  answers;  in  other  words,  to  make  rules  for 
themselves.  In  actual  business  hardly  any  two  of  such 
questions  will  be  found  alike  in  all  the  elements,  a  mass  of 
facts  and  figures  being  presented  from  which  it  is  necessary 
to  select  only  those  pertinent  to  the  question  for  consid- 
eration, and  this  often  puzzles  men  of  consiaerable  know- 
ledge. They  are  like  the  school  boy  who  had  cyphered 
through  his  arithmetic,  and  yet,  when  asked  "  what  20 
pounds  of  beef  would  come  to  at  8i  cents  a  pound,  pro- 
vided the  beef  was  one-quarter  fat,"  was  unable  to  give 
the  answer  on  account  of  "  not  knowing  any  rule  for 
the  fat:' 


Problems  showing  the  amount  of  capital  needed  to  keep 

a  certain  amount  of  stock. 

I. 

In  a  business,  when  the  stock  to  be  kept  is  $5,000 
and  the  sales  $25,000,  for  cash,  what  amount  of  capital 
will  be  required  to  purchase  for  cash  ?  The  preliminary 
expenses  of  the  business,  as  fitting  up  store,  expense  of 
purchasing  the  first  goods,  and  freight  on  them,  estimated 
at  $600.  "  Am.— $5  fiOO, 


394 


APPENDIX. 


II. 


What  amount  will  be  required  in  a  similar  case,  except 
that  the  sales  are  one-fourth  on  the  average  credit  of  three 
months  ?  ^ws.— $7,163. 

III. 

What  amount  will  be  required  in  a  case  similar  to  IL, 
except  that  a  satisfactory  credit  can  be  obtained  at  two 
months  for  an  amount  of  goods  equal  to  the  capital  in- 
vested ?  -4w5.— 13,633. 

lY. 

What  amount  will  be  required  in  a  case  similar  to  III., 
except  that  the  credit  can  be  obtained  at  four  months  ? 

^ws.— 13,425. 

•     V. 

What  amount  will  be  required  in  a  case  similar  to  IV., 
when  the  credit  can  be  had  at  four  months,  to  twice  the 
iimount  of  capital  invested  ?  Ans. — $2,284. 

[Note.— In  all  calculations  having  reference  to  continnons  purchases  and 

■  Bales  it  is  sufficiently  exact  for  ordinary  purposes,  to  take  the  amount  for  a 

month  as  on«  item,  dated  at  the  end  of  the  month,  and  to  count  the  cost  only 

of  the  goods  sold,  leaving  the  profits  to  run  till  the  semi-annual  or  annual 

accounting.] 

YI. 

A  man  proposes  to  buy  out  a  retiring  dealer,  whose 
stock  of  goods  is  inventoried  at  $8,000,  paying  one-fourth 
cash  and  the  balance  in  five  equal  payments  every  three 
months ;  the  sales  are  for  cash,  and  amount  annually  to 
130,000,  at  an  average  profit  of  20  per  cent  on  the  cost ; 
the  stock  of  goods  requires  to  be  brought  up  to  $10,000, 
and  kept  there  by  new  purchases  which  can  be  ob- 
tained on  two  months  credit.  What  amount  of  cash  cap- 
ital will  he  require,  and  when  will  it  n^ed  to  be  furnished, 


MERCANTILE    PROBLEMS. 


395 


supposing  the  net  profits  of  the  business  to  be  $2,000  a 
year,  realized  at  the  end  of  each  six  mouths  ? 

^yis.— $3,833.  At  the  buying  out 
$2,000;  at  the  third  payment 
$433  ;  at  the  fourth,  $200  ;  at  the 
fifth,  $1,200. 

YII. 
In  a  similar  case  to  the  foregoing,  when  the  goods  for 
filling  up  and  replenishing  the  stock  can  be  bought  on 
three  months  credit,  what  capital  will  be  required,  and 
when  ?  .  Ans.—%2fi00  only,  at  the  first  pur- 

chase. 

YIII. 

And  what  amount  of  capital  will  be  required  when  the 
credit  for  the  new  goods  is  limited  to  the  amount  of  the 
capital  invested  and  profits  as  they  accrue  ?  All  other 
things  remaining  similar  to  YI.  and  YII. 

Am.— $5,^00.  At  the  buying  out, 
$2,000;  at  the  first  purchase, 
$1,000;  at  end  ofthe  first  month, 
$67;  at  the  first  deferred  pay- 
ment, $1,133  ;  at  the  third,  $267 ; 
and  at  the  fifth.  $933. 


Problems  relating  to  profits, 
IX. 
A  retailer  sells  $20,000  a  year  ;  his  expenses  for  store 
rent,  clerk  hire,  etc.,  are  $2,000;  his  own  private  ex- 
penses $1,000 ;  one  third  of  his  sales  are  of  such  goods 
that  he  can  only  make  10  per  cent  profit  on  the  cost.  At 
what  advance  must  the  balance  be  sold  at  to  make  a  profit 
of  $1,000  a  year  clear  ?  Ans.—Z4:  per  cent. 


396 


APPENDIX. 


X. 

A  dealer  selling  $30,000  a  year,  yielding  him  a  net 
proSt  of  $2,000  a  year,  over  all  expenses,  had  these  ex- 
penses increased  by  the  nse  in  prices  fifty  per  cent.  They 
had  been  10  per  cent  of  his  gross  sales.  What  increase 
of  profit  on  the  cost  of  his  goods  must  he  ask  to  enable 
him  to  make  the  same  net  profit  afterwards,  without  an 
increase  of  the  amount  sold  ?  Ans.—7.Q7  per  cent. 

XI. 

A  business  declined  in  which  the  sales  had  been 
$25,000  yearly,  for  cash,  at  an  average  gross  profit  of  20 
per  cent,  and  the  proprietor,  to  keep  up  the  amount  of 
sales,  gave  credit  on  one-half  of  them  for  three  months. 
Owing  to  this  he  had  to  hire  an  extra  clerk  at  $600  a 
year,  to  keep  his  accounts  and  make  collections,  and  es- 
timated that  he  would  lose  besides  $300  in  Jiis  interest 
account,  and  $400  by  bad  debts.  What  increase  of  profits 
must  he  make  to  cover  these  extra  expenses  and  losses  ? 

Ans. — 13.67  per  cent. 

[NoTB.-It  is  not  unusual  for  manufacturers  of  staple  kinds  of  goods  to  con- 
tinue a  nominal  standard  price  for  many  years,  making  the  occasional  fluctua- 
tions in  price  by  deducting  a  percentage  from  the  standard  price,  varied  as 
occasion  may  require.  Sometimes  such  discounts  will  be  as  much  as  50  to  75 
percent,  really  reducing  the  price  to  one-half  or  one-fourth  of  the  original  or 
standard  price.    Miscalculations  of  profits  often  occur  through  this  custom.] 

XII. 

A  retailer  bought  a  certain  article  at  75  cents  less  50 
per  cent  discount,  selling  the  same  at  45  cents.  Owing 
to  an  increase  in  value,  20  per  cent  less  discount  was  al- 
lowed. To  meet  this  the  retailer  advanced  his  price  20 
per  cent.     What  profit   did  he  make  before,  and   what 

al'ter  the  rise  in  price  ? 

^;j5._Profit  before  20  per  cent; 

afterwards  only  2.85  per  cent. 


MERCANTILE   PEOBLEMS. 


397 


XIII. 

An  article  costing  $6  a  dozen  was  retailed  at  60  cents 
a  piece.  Owing  to  a  decline  in  price,  10  per  cent  discount 
was  allowed  from  the  standard  price.  This  being  just 
5  cents  a  piece,  the  retail  price  was  reduced  to  55  cents. 
The  decline  continued  from  time  to  time,  each  time  an 
additional  10  per  cent  being  discounted,  and  the  retail 
price  at  each  time  lowered  five  cents.  When  the  dis- 
count had  thus  reached  50  per  cent  at  wholesale,  what 
profit  is  made  in  retailing,  and  how  does  it  compare  with 

the  profit  at  first  ? 

Ans. — ^The  last  price  gives  40  per 
cent  profit,  the  first  only  20  per 
cent  profit. 

XIV. 

An  article  is  offered  in  a  house  selling  exclusively  for 
cash  at  a  certain  price  50  per  cent  discount.  Another 
house  selling  on  six  months  credit,  sells  it  at  the  same 
price,  with  only  45  per  cent  discount;  but  this  house 
gives  6  per  cent  discount  off  from  every  bill  bought  of 
them  if  the  cash  is  paid  at  once.  At  which  house  is  the 
the  artxcle  the  cheaper  for  cash,  and  by  how  much  ? 

j^ns. — Cheaper  in  the  cash  house 
by  3.4  per  cent. 


XV. 

Suppose  that  the  government  tax  on  all  products  of 
labor,  and  all  income  or  earnings  from  capital— whether 
vested  or  floating— is  uniformly  5  per  cent,  and  each  per- 
son endeavors  to  cover  this  tax  by  an  increase  of  the 
price  of  his  product,  and  of  profit  on  his  capital,  so  as  to 
throw  the  burden  of  the  tax  on  others,  how  high  will  the 

34 


398 


APPENDIX. 


prices  rise  above  their  normal  condition,  to  relieve  the  in- 
dividual tax-payer  ?  And  on  whom  will  the  burden  of 
the  tax  eventually  fall  ?  Ans. 


[This  problem  is  not  inserted  as  a  business  one,  but 
to  induce  a  broader  consideration  of  the  subject  of  ad- 
valorera  advances.  It  looks  plausible  that  a  manufac- 
turer need  only  increase  the  price  of  his  manufactured 
goods  the  5  per  cent  which  he  is  assessed,  to  throw  the 
burden  of  the  tax  on  the  consumer,  as  the  consumer  really 
pays  5  per  cent  more  for  the  article  than  before.  But 
when  this  5  per  cent  advance  is  made  by  everybody — by 
the  producer  of  the  raw  material  and  by  the  laborer  in 
his  wages  (for  his  cost  of  living  will  be  increased  5  per 
cent,  and  his  wages  must  advance  to  meet  it,) — it  is  very 
plain  that  the  manufacturer's  advance  of  five  per  cent 
merely  covers  the  extra  cost  of  his  goods — the  advance 
on  the  raw  material,  wages,  rents,  repairs,  etc.,  so  that  he 
must  still  bear  the  loss  of  the  orovernment  tax  himself. 
Supposing  everybody  to  find  this  out  by  the  end  of  a 
month,  and  make  another  rise  of  5  per  cent,  with  the  in- 
tention to  throw  the  burden  of  the  tax  on  others,  it  is 
still  the  same.  Though  the  j^rice  to  the  consumer  has  ad- 
vanced 10  per  cent,  still  each  manufacturer,  each  owner 
of  capital,  has  to  bear  the  loss  of  the  government  tax 
himself.  And  this  must  of  necessity  be  the  final  result, 
even  though  the  advance  should  be  made  periodically  un- 
til the  prices  are  doubled.  Like  stepping  on  the  wheel 
of  a  treadmill,  the  foot  that  halts  descends  just  in  propor- 
tion to  the  upward  movement  of  the  rising  foot,  and  the 
man  remains  stationary,  though  seeming  to  himself  to  be 
moving  upward.  Authority  was  given  by  act  of  Con- 
gress to  railroad  companies  and  other  corporations,  whose 
rates  were  limited  by  charter,  to  add  the  amount  of  gov 


MERCANTILE   PROBLEMS. 


399 


ernment  tax  to  their  rates.  But  this  could  not  relieve 
them  from  the  tax.  It  simply  enabled  them  to  keep  step 
with  others  in  the  first  advance  in  prices.  The  author- 
ized increase  was  directly  counterbalanced  by  the  higher 
cost  of  everything  they  had  to  buy  to  operate  their  va- 
rious enterprises.] 


Problems  showing  the  amount  of  merchandise  or  stock 
of  goods^  lohich  may  he  maintained  with  a  definite 
amount  of  cash  capital  and  varying  credit. 

XYI. 

A  person  has  $3,500  capital  to  commence  business  with. 
He  can  buy  goods  on  three  months  credit,  to  an  amount 
equal  to  his  capital,  which  credit  will  be  renewed  from 
time  to  time  as  he  pays  off.  He  can  rely  on  sales  of 
$2,000  a  month  for  cash,  and  it  will  cost  him  $300  to  fit 
up  his  store  and  pay  expenses  before  he  begins  to  sell. 
What  is  the  largest  amount  of  goods  he  can  keep,  and 
always  be  able  to  meet  his  payments  ? 

^?i5.— $6,400. 


xvn. 

What  amount  could  be  kept  in  a  similar  case,  except 
that  one  half  the  goods  are  sold  on  sixty  days  credit  ? 

^/i6'.— 5,200. 

XYIII. 

What  amount  could  be  kept  under  the  same  circum- 
stances as  problem  XVI,  except  that  a  month  would 
elapse  after  the  purchase  before  he  could  begin  selling?. 

Ans. — Same  as  in  problem  XVI, 
$6,400. 


400 


APPENDIX. 

XIX. 


In  a  case  like  problem  XV,  when  the  exceptions  in 
both  problems,  XVI  and  XVII  avouIcI  occur,  what 
amount  could  be  kept  ? 

A?is.— The  business  could  not  be  conducted,  as  any 
debt  incurred  could  not  be  met,  nor  could  the 
stock  of  goods  be  kept  up  to  its  minimum,  if 
even  the  capital  was  invested  in  it. 


Frohlems  in  averaging  time  of  payments  so  that  they 
can  he  met  by  returns  from  the  business. 

XX. 

A  person  having  a  capital  of  $1,000  went  into  a  "busi- 
ness which  required  him  to  keep  a  stock  of  $3,000.  One- 
third  of  this  was  composed  of  goods  which  could  only  be 
bought  for  cash  down;  the  other  two-thirds  were  such  as 
could  be  bought  at  four  months  credit.  A  month's  time 
was  lost  between  the  time  bf  buying  the  stock  and  com- 
mencing to  sell  the  goods.  And  the  sales  amounted  to 
$1,000  a  mouth,  half  of  which  was  of  cash  goods,  and 
half  of  those  purchased  on  credit.  How  shall  the  pur- 
chase on  credit  be  averaged  so  as  to  meet  the  payments 
at  maturity,  without  prolonging  the  average  length  of 
credit,  and  the  stock  of  goods  be  kept  up  to  the  full 
quantity  in  the  meantime  ? 

Ans. — Byfoiir  payments  of  $500 
each  at  2,  3,  4  and  5  months. 

XXI. 

A  dealer  with   $2,000,  buying  his  goods  at  sixty  days 
credit,  whose  stock  at  its  maximum  in  the  busy  season  was 


MERCANTILE   PROBLEMS 


401 


$8,000,  but  which  was  generally  reduced  to  $2,000  at  the 
end  of  each  season,  which  reduction  enabled  him  always 
to  pay  oif  all  he  owed,  found  himself  at  the  close  of  a 
certain  year  with  his  full  stock  on  hand,  owing  $1,000, 
then  fully  due.  His  sales  are  $0,000  a  year,  divided, 
however,'  irregularly,  three-fourths  of  them  equally  in  the 
three  business  months  in  the  spring,  of  April,  May  and 
June,  and  in  the  three  fall  months  of  September,  October 
and  November,  and  the  other  fourth  equally  in  the  other 
months.  He  is  under  the  necessity  of  asking  for  an  ex- 
tension of  time  in  which  to  make  payment,  and  enable 
him  to  sell  off  this  surplus  of  stock,  which  can  only  be 
sold  in  the  active  fall  months,  and  desires  to  know  what 
is  the  earliest  period  he  can  make  payment  of  this  debt 
in  four  instalments,  and  at  the  same  time  continue  to  buy 
goods  as  heretofore  at  60  days,  as  needed  to  replenish  his 
stock  and  pay  promptly  for  them,  and  so  that  at  the  end  of 
the  year,  if  he  reduces  his  stock  of  goods  to  $2,0C0,  he 

will  be  out  of  debt  again. 

Ans. —  i  each  in   1,  2,   4   and  9 

months. 


XXII. 

A  dealer  at  the  end  of  an  unfavorable  year  found  him- 
self unable  to  continue  paying  his  indebtedness  at  ma- 
turity. He  had  a  stock  of  goods  costing  him  $0,000,  and 
outstanding  accounts  amounting  to  $4,000,  both  of  which 
he  estimated  worth  to  him,  if  he  could  continue  in  busi- 
ness 75  cents  on  the  dollar.  He  owed  $8,000.  His  credi- 
tors  upon  an  investigation  concluded  that  if  he  made  an 
assignment  to  them  his  assets  would  not,  if  forced  to  a 
speedy  sale  and  collection,  yield  over  50  per  cent  of  their 
nominal  value.  The  debtor  satisfied  of  his  ability  to  get 
such  fresh  supplies  of  goods  as  he  would  require  at  60 


402 


APPENDIX. 


MBBCANTILB   PROBLEMS. 


403 


days  credit,  and  that  he  could  sell  $20,00C  a  year  for  cash 
at  20  per  cent  profit  on  cost,  and  through  these  profits  pay 
his  expenses  while  settling  up  the  estate,  proposed  to 
pay  to  the  creditors  10  per  cent  more  on  their  claims  than 
they  would  realize  from  the  assets  by  the  assignment,  at  3, 
6,  9  and  12  months,  which  they  accepted.  Supposing  tho 
old  stock  and  debts  to  be  worth  the  debtor's  estimate,  and 
to  be  sold  off  and  collected  in  in  time  to  make  the  compro- 
mise payments,  what  will  be  the  rate  per  cent  of  his  com- 
promise ;  and  what  amount  of  additional  capital  will  ho 
require  in  the  business  to  enable  him  to  keep  a  stock  of 
$4,500  ?  Ans.~lle  will  pay  72|^  per  cent, 

and  need  only  the  nominal  ad- 
dition to  his  capital  of  $23. 


[Such  problems  as  the  foregoing  require  the  consideration  of  two  questions, 
one  the  settlement  up  of  the  old  indebtedness,  as  problem  XIX.,  and  tho 
other  the  carrying  on  of  the  new  business,  as  problem  V.  When  such  expe- 
riences occur  in  actual  business,  it  is  well  to  keep  this  two-fold  character  of 
the  work  to  be  done  in  view,  and  endeavor  to  make  the  old  assets  settle  up 
the  old  debts,  drawing  the  living  and  expenses  of  the  business  from  the  new 
business.] 


xxm. 


In  a  case  similar  to  the  foregoing,  when  the  dealer  un- 
conscious of  the  depreciated  value  of  his  assets,  continues 
on  a  year  longer  by  borrowing  money  from  time  to  time  to 
meet  his  payments,  and  then  is  compelled  to  suspend,  with 
bis  assets  the  same  in  amount  and  A'alue  as  before,  but  his 
indebtedness  increased  by  interest,  etc.,  to  $8,400,  of 
which  $3,000  is  for  borrowed  money,  and  must  be  paid  in 
full,  the  other  circumstances  all  being  the  same,  what 
per  cent  can  he  pay  to  his  general  creditors,  and  be  in 
the  same  position  as  before  at  the  end  of  the  year  ? 

Ans. — 50  per  cent. 


JProblems  relating  to  the  withdrawal  of  surplus  capital 

XXIV. 

A  retailer  selling  $30,000  a  year,  two-thirds  of  which 
was  for  cash  and  one-third  not  paid  till  four  months,  at  a 
profit  of  20  per  cent  on  the  cost,  whose  sales  were  mainly 
in  the  months  of  April,  May,  June,  October,  November 
and  December,  when  he  kept  a  stock  of  $10,000,  each  of 
the  intervening  month's  sales  being  only  one-half  of  the 
busier  months,  and  the  stock  of  goods  then  reduced  to 
$6,000,  found  his  balance  sheet  to  stand  after  the  end  of  a 
very  profitable  year,  as  follows :  "  Mdse.  $6,000.  Ac- 
counts due  him,  $4,000.  Cash,  $550.  Indebtedness, 
$1,550  "—for  his  December  purchases.  During  the  fol- 
lowing month  of  January  his  sales  and  collections  suflSced 
to  pay  his  December  purchases,  except  about  $100.  The 
same  in  February  had  fully  paid  January  purchases, 
besides  increasing  the  cash  on  hand  to  $1,100 ;  also  by 
the  March  receipts  the  February  purchases  were  paid,  be- 
sides increasing  the  cash  on  hand  to  $1,700  and  in  April 
the  receipts  paid  in  like  manner  the  March  purchases,  the 
cash  on  hand  further  increasing  to  $3,300.  He  is  inclined 
to  draw  $1,000  from  his  business,  as  surplus  or  unneces- 
sary capital.  Can  he  do  so  and  continue  to  pay  for  his 
purchases  at  30  days,  supposing  that  his  business  does 
no  more  than  just  pay  expenses  ? 

Ans.—^o.    At  the  end  of  July  he  will  need  all 
all  his  means,  and  yet  be  short  $200  of  enough 

•  to  pay  for  his  June  purchases. 

XXV. 

Suppose  in  the  case  of  the  preceding  problem  that  the 

dealer,  by  more  care  and  attention  to  collections,  was 

able  to  collect  in  his  credit  sales  in  two  months,  what 

amount  of  capital  could  he  then  spare  from  the  business  ? 

^W5.— $1,750. 


404 


MERCANTILE    FORMS. 


n 


Invoice  Book,   showing  memorandum   of   corrections   on    it 

while  the  invoice  is  out  for  correction. 

(Referred  to  on  page  258.) 


1866 

April 

336 


4916 
383 
1497 
R63 


10 
1 
4 


Amount  brought  forward 
James  Martin,  3  mos. 


ps  Cotton  drilling 


u 


f  brd  muslin 


14 
836 


Thomas  &  Johnson.       60  ds. 
ps  Black  silk 
"  Brown  do. 

Marcelline  30  in. 

Ribbons 


383. 1  ijd.  short 

B  63.  liicts  a  ps.  overcharged 


36 
166 


a 


a 


Williams,  "West&  Dimon,  60ds 
ps  Blk.  Cassimere 
"  Mix'd  Satinet 


14.  damaged  2(^cts  yd  by  stains 
830  2  holes  in  it—\  yd  damage 


60 
36 
80 


20 
10 


24 
30 


2,00 

1,20 

40 

3,30 


7 
16 

23 


120 
43 
32 
19 

[215 


1,50 
1,00 


Amount  carried  foi-ward 


36 
30 


20 
60 


80 


00 
20 
00 

80 

00 


$417 


23 


66 


00 
00 

00 


69 


80 


The  claims  in  7/?a/2C  are  first  noted  in  pencil— when  the  invoice  is  received 
back  corrected,  the  actual  corrections  are  deducted  in  ink,  and  tlie  footing  car- 
ried into  the  outer  column  ;  showing  that  the  entry  is  ready  to  be  posted. 


Form  for  a  Daily  Cash 

:  Sales 

Book. 

(Referred  to  on  page  263.) 

1866 

R.  S.  G. 

T.  M. 

P.  L. 

S.  T. 

A.  R. 

'u 

April  11 

20.19 

15.17 

.  8  19 

4.17 

2.12 

49 

"     12 

25.61 

18.60 

17.12 

5.14 

50 

66 

97 

"     13 

13.41 

30.31 

absent 

10.11 

1.79 

55 

62 

«     14 

17.60 

10.19 

30.12 

out 

2.86 

60 

77 

"     15 

sick 

35.17 

12.49 

3.19 

5.14 

55 

99 

"     16 

13.20 

20.10 

17.30 

5.86 

3.20 

59 

66 

Total  for  the  week 

..$348.85 

mercantile   forms. 
Form  op  a  Ticket  Described  Page  263 


405 


Mrs. 

N. 

Miller. 

rb     6  muslin 
en     3  pap  camb 
ru     12  prints 
bn    2  pr  hose 

20 
25 
15 
60 

1.20 

75 

1.80 

1.20 

Ap.  11  R.  S.  G. 

$4.95 

Summary  of  the  Business  of  A.  B.  &  Co. 
(Described  on  page  269.) 


for  the  years 


Mdsc.  on  hand  1st  of  the  year 

Bought  during  the  year 

Sold        "  ''        for  cash 

a  «  "        on  credit 

Mdse.  on  hand  at  close  of  year 
Gross  profits  on  sales 
Interest  account,    Dr. 


u 


u 


Cr. 
Dr. 
Cr. 


Profit  and  loss, 

Expenses,  store 

"        private 
Outstanding  accounts 
Estimate  of  loss  on  same 
Cash  on  hand  at  end  of  year 
Indebtedness 

Net  profits  added  to  capital 
Capital  at  end  of  year 


I860    I     1861      I      1862 


-^9 


6314iV 

24699:38 

2131436 

7786143 

7143'j79 

523041 

420,79 

639|94 

163;93 

1369 

191738 

213649 

243994 

214!00 

436  61 


71431 


79 


26346 

18321 

12693 

7462 

4985 

501 

493 

204 

15109 

2114  57 


2774 
1245 


89 
45 


724545 


46 
35 
36 
12 
58 
36 
43 
07 


2233 

4693 
520 
214 

4084 
440 

7689 


50 

87 
00 
69 
53 
70 
15 


7462112 

2169576 

2046043 

897369 

9215|83 

9492107 

523  46 

605  64 

469  17 

46 

16 

2117  65 

1836 

95 

1565159 

OjOO 

193i|73 

961788 


23 
2079 


46 
00 


406 


MERCANTILE   FORMS. 


to 

CO 
CI 

o 
Q 

n 

M 

« 

o 

P 
do" 


O 
U 
U 

o 

O 

1^ 

P 
Q 

Iz; 

O 
1^ 


o 
o 


s 


o 


O 


be 
3 

<1 


3 
^ 


d 

3 

•-3 


May. 
20.00 

o 

a  1 
<1 

o 

— ,co 
2J  — 

15] 

13.70 

18] 

20.4G 

Feb. 

J 

o 

CO 

• 

20.90 

'P. 


in 


00  ^-3 


r— 


c 

3 

t» 

o 

CJ 

C 

ci 

(X 

s 

^ 

o 

•4-1 

C3 

o 

OJ 

«^H 

3 

Xi 

a 

w. 

O 

H 

s 

03 

.c" 

•-3 

a 

C 

C3 

o 

1Z 

o 

h 

3 

3 

3 

pq 

tt 

« 

M 

Account  op  Daily  Sales  for  1866 
(Described  on  page  266.) 


Day 

of 
month 


1 
2 
3 

4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
IG 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 


JANUARY. 


Cash. 


46.90 
83.41 
33.69 
27.56 
101.63 

•  •  •  •     •  > 

94.69 
87.60 
78.94 
88.68 
59.11 
99.04 

"86.74 

as.46 

79  23 

40.16 

60.72 

104.40 

'108.46 
41.49 
38.69 
2S  19 
33.12 
40.06 

"22  41 
29.32 


Credit. 


$1603.00 


si.as 

41.17 
50.16 
80.43 
17.19 

•  •  •  •     •  • 

36.48 
39.23 
12  64 
14.16 
10.18 
25  50 

"17.51 
12  91 
16.45 
3:i.72 
18.56 
10.11 

•  •  •  ■     • 

6.56 
18.93 
12  48 
32.40 

7  19 
11.49 

•  •  •  • 

78.15 
23.46 

* 60 739 


FEBRUARY. 


Cash. 


33.36 

42.69 

12.171 
15:86 

'43.21 
17.02 
27.82 
.S<>.40 
18.76 
39.16 

•  ■  •     •  • 

4T.33 


Credit. 


92.12 

a46 

00 

21.82 

"  '2..36 
12.26 
9.13 
10.27 
10.93 
15.46 

•  >  •     •  • 

18.06 


These  columns  are  continued  for  each  of 
the  t\\*clve  months.  The  paper  ought  to 
be  eleven  to  twelve  inches  wide  folded,  to 
open  twenty-two  to  twenty-four  inches,  so 
that  the  business  of  the  whole  year  may  bo 
seen  at  a  glance. 


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